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Tax Planning

The purpose of tax planning is to discover how to accomplish all of the other elements of a financial plan in the most tax-efficient manner possible. Tax planning thus allows the other elements of a financial plan to interact more effectively by minimizing tax liability.

Tax planning encompasses many different aspects, including the timing of both income and purchases and other expenditures, selection of investments and types of retirement plans, as well as filing status and common deductions.

Tax Deductions

Deductions under Chapter VI (sec 80C)

  • Deduction under Pension scheme (sec 80C).
  • NSC (sec 80C).
  • Public Provident Fund (sec 80C).
  • Employees Provident Fund & Voluntary PF (sec 80C).
  • Children's Education (sec 80C).
  • Housing loan principal repayment (sec 80C).
  • Insurance premium (sec 80C).
  • Infrastructure Bonds & others (MF, ULIP, etc.) (sec 80C).
  • Medical Insurance Premium (sec 80D).
  • Medical for handicapped dependents (Sec 80DD).
  • Medical for specified diseases (Sec 80DDB).
  • Higher Education Loan Interest Repayment (Sec 80E).
  • Donation to approved fund and charities (sec 80G).
  • Rent deduction (sec 80GG) only if HRA not received.
  • Deduction for permanent disability (80U).

Deductions from gross income on Life Insurance premium paid

Under Sec.80C of the Income Tax Act.

Premiums paid up to maximum of Rs.1,00,000 subject to maximum of 20% of Capital sum Assured under Traditional & Unit linked Plans.

Under Sec.80CCC of the Income Tax Act.

Premiums paid up to maximum of Rs. 1,00,000 under pension plans. However, u/s.80 CCE, the aggregate amount of deduction under section 80C, section 80CCC, and section 80CCD shall not, in any case exceed one lakh rupees.

Under Sec.80DD of the Income Tax Act.

Premiums paid under plans exclusively for physically handicapped persons upto Rs.50,000/-In case of severe disability as certified & issued by the medical authority upto Rs. 75,000/- Exemption of Life Insurance Proceeds.

Under Sec.10(10D) of the Income Tax Act.

Maturity benefits are tax free. However in cases where premium exceeds 20% of capital sum assured within a year, benefits paid in excess of premiums paid will be taxable. Death benefits are tax-free.
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