Financial Instruments for Tax Saving Tax saving as per Section 80(C) Section 80C provides a list of instruments,

which you can invest in for saving tax. One can invest a maximum of Rs 1 lakh in all the following instruments put together so that the entire amount of Rs 1 lakh shall be deducted from the taxable income. Deduction is received for the following investments1. Any life insurance policy or unit-linked insurance plan (ULIP). Lock-in period for ULIPs is 3 to 5 years and the returns vary according to the performance of fund. But if the annual premium exceeds 20% of the sum assured on your policy, then tax benefit will not be received. 2. Any retirement benefit plan which is offered by mutual funds. Examples are Templeton India Pension Plan and UTI Retirement Benefit Plan 3. A Provident Fund, which is covered under the Provident Fund Act. This means investments made through salary deduction in the Employees Provident Fund (EPF) account as also investments directly in the Public Provident Fund (PPF). One can invest up to Rs 70,000 in PPF. Current rate of return on EPF is 8.5% & that on PPF is 8 % 4. Approved superannuation fund. In this the employer, on behalf of employee, does deducts the investment amount from employees salary. 5. The National Savings Certificates (NSCs). 6. The Equity Linked Savings Scheme (ELSS) that are offered by mutual funds. 7. Certain Pension policies provided by insurance companies where the benefits were earlier available u/s 80CCC. Earlier, a limit of Rs 10,000 was present on such investments; however now that ceiling has been removed. 8. Bank fixed deposits which provide the Section 80C tax benefit. They have a lock-in period of 5 years. 9. Apart from above investments, one can also get a deduction on certain expenses like the principal repayment on home loan and tuition fees paid for childrens education. BANK SAVINGS

1. Bank Fixed Deposits [Term Deposit]

Under a Fixed Deposit Saving Scheme a certain amount of money is deposited in the bank for a given time period with fixed rate of interest. Fixed Deposit Scheme is ideal when one wants to invest money for a longer period of time and get a regular income. It is also safe, liquid and gives high returns. Loan / Overdraft facility is available against bank fixed deposits. Now many banks dont charges for premature withdrawal. 2. Recurring Deposits In a Recurring Bank Deposit Savings Scheme, the investor invests a certain amount in a bank on a monthly basis for a fixed rate of return. There is a fixed tenure, at the end of which the principal sum as well as the interest earned in that period is given to the investor Recurring Deposits provide an element of compulsion to save at higher rates of interest applicable to Term Deposits along with liquidity to access savings at any time. GOVERNMENT TAX SAVINGS RBI Bonds/RBI Relief Bonds RBI Bonds have a special provision that allows the investor to save tax. These Bonds are issued by the RBI. The interest is compounded on half-yearly basis. The maturity period of RBI Bonds is 5 years, and the interest received is tax-free in the hands of investor.

POST OFFICE SAVINGS 1. 2. 3. 4. 5. 6. 7. Post Office Time Deposits Post Office Recurring Deposits Post Office Monthly Income Scheme [Post office MIS] National Savings Certificates [NSC] National Savings Scheme [NSS] Kisan Vikas Patra [KVP] Public Provident Funds [PPF]

OTHER SAVINGS 1. Infrastructure Bonds: Infrastructure bonds are available from ICICI and IDBI in the name of ICICI Safety Bonds & IDBI Flexibonds. They provide tax-saving benefits for the investor under Section 88 of the Income Tax Act, 1961; one can reduce their tax liability up to Rs 16,000 p.a. 2. Company Fixed Deposits: Company Fixed Deposits are fixed deposits in companies that earn a fixed rate of return over a period of time. Financial institutions as well as Non-Banking Finance Companies (NBFCs) also accept such kind of deposits.

Gross How Much Tax Can HDFC Standard Life Annual You Save? Plans Salary Across all Upto Rs. 30,900/- saved All our Life Insurance Sec. 80C income on investment of Rs. Plans slabs 1,00,000/Across all Upto Rs. 30,900/- saved Sec. income on Investment of All our Pension Plans 80CCC slabs Rs.1,00,000/Upto Rs. 9,270/- saved on investment of Rs. 30,000/ All our Health (Inclusive of Rs.15,000/Insurance Plans towards health All the health Across all Sec. 80 insurance of parents) insurance riders income D* Upto Rs. 10,815/- saved available with our slabs on investment of Conventional Plans Rs.35,000/(Inclusive of Rs. 20,000/- towards health insurance of parents

Income Tax Section

who are senior citizens) Rs. 41,715/Total Savings Possible **

Rs. 30,900/- under Sec. 80C and Sec. 80CCC Rs. 9,270/- or Rs. 10,815/- under Sec. 80D Above figures calculated for a male with gross annual income exceeding Rs. 5,00,000/-

Sec. 10 (10)D

Under Sec. 10(10D), the benefits received by you are completely tax-free Applicable to premiums paid for all Health Insurance Plans, Critical Illness Benefit, Accelerated Sum Assured and Waiver of Premium Benefit. ** These calculations are illustrative and based on our understanding of current tax legislations.

The above-mentioned tax benefits are subject to changes in the tax laws. Please contact your tax consultant for an exact calculation of your tax liabilities.