Ways to Reduce Your Tax Liability By 20%
Tax rebate under Section 88 is available to an individual and HUF. The following are the investment schemes which qualify for deductions from tax payable at a flat rate of 20% of the contributions made. The aggregate contribution to all these schemes qualifying for deduction is subject to a ceiling of Rs. 60,000. Contribution or premium payments can be in the name of or on the life of the assessee himself, the spouse and any child of such assessee.
The List of Instruments that can be used to save tax liability.
-Life Insurance Premium – Life policy or endowment policy, Children’s deferred endowment assurance policy, non-commutable deferred annuity
-Payment made by Government employees to the Central Government Employees Insurance Scheme, Maharashtra State Government Employees Group Insurance Scheme 1981.
-Contribution to Frontier Force Group Insurance Scheme
– Contribution (not being repayment of loan) towards statutory provident fund, recognised provident fund, 15-year public provident fund set up by the Government and approved superannuation fund.
-Any sum deposited in a 10-year or 15-year account under the Post Office Savings Bank (CTD) Rules, 1959.
-Subscription to National Savings Scheme, 1992, National Savings Certificates, VI (interest accrued is treated as amount reinvested in these certificates) VII and VIII issues
-Contribution to unit-linked insurance plan of Unit Trust of India and LIC Mutual Fund (i.e,, Jeevan Dhara / Jeevan Akshay)
-Contribution (upto Rs.10,000) to notified Equity Linked Savings Scheme of a Mutual Fund (notified for the purpose of section 10(23D)) or UTI
Contribution to any notified pension fund set up by a Mutual Fund (notified for the purpose of section 10 (23D) or by the UTI (i.e,, Retirement Benefit Unit Scheme of UTI and Kothari Pioneer Pension Plan set up by Kothari Pioneer Mutual Fund)
Any sum paid as subscription to Home Loan Account Scheme of the National Housing Bank (as per the rule 14 of the Home Loan Account Scheme, interest accrued is treated as reinvested in the Home Loan Account) or notified pension fund of the National Housing Bank.
-Any payment made towards the cost of purchase or construction of new residential house property. The deduction will be allowable in respect of payments made upto Rs. 10,000 during the previous year for the purpose of purchase or construction of residential house
-Any sum paid (w.e.f. assessment year 1992-93) as subscription to a notified deposit scheme (not being a scheme the interest on deposit whereunder qualifies for deduction under section 80L) of
i.Public sector companies engaged in providing long-term finances for construction or purchase of houses in India for residential purposes; or
ii. Any authority constituted in India by or under any law enacted either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns, villages or for both.
For all the above investments, a tax rebate of 20% is allowed upto a maximum of Rs 12,000/- A further rebate of upto Rs 2,000/- may be claimed on further investment up to Rs.10,000 in the shares, debentures or units of infrastructure sector. Any amount invested in debentures of and equity shares in, a public company engaged in infrastructure including power sector and providing tele-communication services or Units of a mutual fund referred to in Section 10(23D) and approved by the Board.