It is important for you to note that the deduction on investment under Section 80C or Section 80D is only available in old income tax rules. If you are using a new income tax system, you will not get the benefit of deduction on investment under sections 80C and 80D.
For tax savings, you can invest in PPF, SSY, ELSS and NPS by 31 March. If you do not invest in these investment options by 31 March, you will not be able to claim deduction for this financial year. Investors investing in these investment options do not need to worry. Experts say that if you have also invested in these investments, then you should review them once. The reason for this is that if there is any deficiency in investment, then investments can be made by 31 March to compensate for it. It should be kept in mind that deduction on these investments is given only under the old Income Tax Rules.
Cut on investment up to Rs 1.5 lakh under Section 80C
In the old Income Tax Rules, under Section 80C of the Income Tax Act, 1961, a deduction of up to Rs 1.5 lakh was allowed in a financial year. This section consists of about a dozen investment options. This includes PPF, SSY, NPS, ELSS etc. Cuts can be claimed by investing in one or more schemes. But, it should be kept in mind that whether you invest in a plan or in more than one schemes, you can claim a maximum cut of up to Rs 1.5 lakh in a financial year.
Cut on health insurance premium under Section 80D
If you have not purchased health insurance, you can buy it by 31 March. With this, you will be able to claim deduction on its premium while filing income tax returns for this financial year. If you buy health insurance after 31 March, you will not be able to claim cuts on its premium while filing returns for this financial year. A person can buy a health policy for himself and his family and claim a maximum cut of Rs 25,000 on his premium. If you are over 60 years of age, you can claim a cut of Rs 50,000. In addition, a cut of Rs 50,000 can also be claimed for elderly parents on purchasing separate health policy.
Keep these things in mind while investing
You have to keep in mind that the purpose of investment should not be only tax savings. You have to invest keeping your financial goals in mind. If you can take some risk, you can invest in tax plans of mutual funds. This scheme is also called ELSS. ELSS provides the most returns in tax-saving investment options. Its lock-in period is three years which is the smallest lock-in period of tax-saving investment options. If you cannot take the risk then you can invest in bank tax FD or PPF. However, it should be kept in mind that bank tax-sewing FD has a lock-in period 5 years, but PPF is a long-term investment. It matures after 15 years.
