Don’t Go Blind When Planning Tax To Be Paid On Your Income

We are in the season of Income Tax Returns. Just to save the tax amount, many taxpayers invest their hard earned money in various tax saving instruments; the pros and cons of which they don’t know about. Thus, to save thousand rupees of tax, they end up spending lakhs which in return; positions in a loss at the time of redemption.

Here are the ways how taxpayers can spend their hard-earned money which can get handsome return along-with saving the tax outflow in the given year.

Penalty for not showing the income in Income Tax Return

The golden rule for investing your money is “Have a financial goal & risk appetite”. By this analysis one can know how to invest in proper tax/ non-tax saving instruments.

The Income Tax Act-1961 provides various deductions of Chapter-VI. Among those; deductions available under section 80 series is popular among taxpayers. Let’s learn few of them in detail.

  • SECTION 80C:

This section of income tax act is most popular and mostly utilized by the people. This section can reduce your income upto 1,50,000 and can save your hefty amount of tax. This covers almost all beneficial investments which are safe as well as profitable. They are, Life Insurance Premium, PPF with minimum amount of 500Rs./month, mediclaim & tution fee of the child.


This section provides deduction regarding the medical insurance amount received from the employer. Deduction limit is of 25000Rs for assesses. Additional 25000Rs deduction is allowed  for expenses incurred on parents’ insurance & the same would increase up to Rs.50,000 if parents’ age is above 60 years.



Under this section one can claim deduction of Rs.40,000 incurred on medical expenditure for taxpayer and his/her spouse and children.


Under this section individual can claim deduction upto 8 years with no maximum limit. Apart from taxpayer self, the interest can be claimed for spouse and children.


After utilizing the limit of Rs.2 Lakhs Under sec.24 under the head House Property, you still can claim Rs.50,000 of Interest paid on home loan. To claim deduction under section 80EE the condition is that you should not be owner of any other house property on the date the loan was sanctioned to you.


This section is useful for salaried person residing in the rented premises and are not receiving House Rent Allowance; the rent paid will be deductable under this section of the Income Tax Act.

These above stated deductions are most popular and safe ones in which you save tax along-with yielding nominal returns at the same time(If investment).

Difference between Section 44AD, 44ADA and 44AE of Income Tax Act

Now let’s learn other deductions which are little complex and requires market understandings and are bit risky for taxpayers.


  • ELSS SEC.80C:

    These are the Equity Linked Saving Schemes directly concerned with the stock market fluctuations and are risky in nature. Thus before attracting towards this kind of tax saving fund one should gain in-depth knowledge and prediction power of stock market as the equity market is highly volatile and doesn’t promises you return on investment.

  • ULIP SEC.80C:

    ULIP stands for Unit Linked Insurance Plan. This is the most complex and manipulating tax-saving instrument which provides insurance cover along with investment of your premium fund. This again is risky as is concerned with market volatility. One should have good market prediction ability otherwise taxpayer may end up redeeming less amount than paid as premium.

New GST Payment and Input Tax Credit (ITC) calculator

Above stated investment are not always loss-making but they are depended on market fluctuation thus requires kind attention before spending the earnings in the same.

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The author of above article is Bhavik Sindhvad.

Disclaimer:The article or blog or post (by whatever name) in this website is based on the writer’s personal views and interpretation of Act. The writer does not accept any liabilities for any loss or damage of any kind arising out of information and for any actions taken in reliance thereon.  It is prepared based on understanding of provisions as stood applicable as on date.
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