There are many options to save tax by investing in different schemes. The benefit is available under section 80-C and various other sections. Tax saving schemes is legal and any body can avail the facility.
Investment in Public Provident Fund or PPF Account
PPF is one of the most attractive tax saving options. Minimum amount of investment is Rs. 500 and maximum amount is Rs. 100000/-. The current rate of interest on Public Provident Fund is 8.8% which is also exempted from tax. PPF investment can be done any nationalised bank or any designed post offices. Period of investment is 15 years which can be extended for a further period of 5 more years. Loan facility is also available against PPF Account.
Investment in National Saving Certificate or NSC
NSC is another oldest and attractive scheme to save tax. Tax benefit is available under section 80-C against the amount invested in NSC account. Minimum amount of investment is 100 and tax can be saved as per the limit prescribed in section 80-C.
Payment of Life Insurance Premium
Life insurance has many benefits.
Secured amount in case of any unexpected incident
Amount for Medical treatment
Bonus on LIC
Grace period for payment
Facility to restart policy after discontinuation etc
Amount of premium paid against LIC policy is exempted under section 80-C. But in current year the premium amount should be 10% of the policy amount to gent tax benefit.
Investment in Notified Mutual Funds
Tax can be saved by investing in notified Mutual Funds. There is 3 year lock in period for the amount invested. Equity based mutual fund definitely has risk also. Deduction against amount invested in Mutual Fund is available under section 80-C
Investment in Unit Linked Insurance Plan or ULIP
This is another option to save tax under section 80-C. The threshold limit has been increased from 3 years to 5 years as per the rules of IRDA.
Investment in Bank Deposit for with a lock in period for 5 years
Banks are giving attractive return for long term investment. Tax can be saved by investing in a bank for 5 years. This scheme is also available under section 80-C.
Investment in Employee Provident Fund account
Amount deposited by way of Employee contribution to Provident Fund is also eligible for deduction under section 80-C.
Investment in Rajiv Gandhi Equity Scheme
A new investor can invest in Rajiv Gandhi Equity scheme and avail deduction upto Rs. 50000/- from taxable income. But equity schemes definitely have risk also.
Deductions are available under other sections also for the amount spent by the assessee as tuition fee, interest on housing loan, instalment paid on housing loan, med claim premium paid, medical expenses, donation paid under section 80-G etc
Penalty under Income Tax Act 1961: Sections 158BFA(2)221(1), 271(1)(b), 271(1)(c), 271(1)(d), 271(4), 271A, 271AA, 271AAA, 271B, 271C, 271CA, 271D, 271E, 271F, 271FA, 271FB, 271G, 272A(1), 272A(2), 272AA, 272B, 272BB