If you exhaust your investment window for saving tax under Section 80C and feel that the Finance Minister Arun Jaitely hasn’t done justice by increasing the ceiling only by Rs 50,000, then there are other options to get the dual advantage of saving and tax saving.
The Union Budgets presented earlier during this century have opened up additional windows for tax saving apart from Rs 1.5 lakh under the Section 80C basket.
Rajiv Gandhi Equity Savings Scheme
To lure retail investors into equity, the RGESS has been launched under Section 80CCG. Under this scheme investors who have never invested into equity directly and have an annual income of upto Rs 12 lakh can claim tax benefits. A deduction of 50% of the investment amount can be claimed over and above the 80 C limit only for the first three consecutive years.
Investments are capped at Rs 50,000, so a maximum of Rs 25,000 can be claimed for deduction. As a result one can save Rs 2,575 to Rs 7,500 depending on the tax bracket through this scheme launched during the Budget 2012.
An additional opportunity of Section 80CCF puts additional Rs 20,000 worth of deduction for taxable income. Investments into long-term infrastructure bonds issued by Life Insurance Corporation of India (LIC), Industrial Finance Corporation of India (IFCI), Infrastructure Development Finance Company (IDFC), L&T Infrastructure Finance and other such infrastructure NBFC approved by RBI are eligible for deduction.
New home buyers
First home buyers can claim an additional deduction of Rs 1 lakh under freshly laid Section 80EE. Those who have taken a loan of upto Rs 25 lakh for their home costing upto Rs 40 lakh can claim this deduction, applicable from the Assessment Year 2014-15.
Savings Bank Account
Though this isn’t actually a window, but one gets an exemption upto the limit of interest earned. The Section 80TTA offers an exemption of savings bank account interest upto a maximum of Rs 10,000.
One must not count fixed deposit interest into this exemption limit.
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