Saturday, 10 January 2015

Tax Planning for the Assessment Year 2015-16(Financial Year 2014-15)

It is again that time of the Financial year where you start looking at the possible Tax Saving Options. In most cases people are unable to do the Tax Planning wisely and end up either investing entirely on Insurance Policies or opt for Low Return scheme. But if you spend some time in planning your investment not only will you get better coverage but also reduce your Tax Burden effectively.

I will try and highlight possible Tax Saving Investment options for you.

Now let’s look at the Tax Deductions available under Various Sections.

Under Section 80C: Deductions available upto Rs 1,50,000 on the Investment.

Under 80D: Deductions is available on Health Insurance Premium paid upto Rs 15,000/- for Self, Spouse and Dependent Children. Further claim upto Rs 15,000/- can be made on Health Insurance premium paid for dependent parents.

Here I will restrict my discussion to Deductions under these two Sections and you can read about other Tax Deductions in the link given below.

Thus the maximum deduction that can be availed under Section 80 C& D cumulatively is Rs 1,80,000/-.

Possible Investment Option for Financial Year 2014-15 under Section 80C.

Contribution to Employee’s Provident Fund (EPF)
Varies year to year (Generally between 8.25%-9.5%)approx
Till the Retirement
Public Provident Fund (PPF)
Varies year to year (Generally between 8.25%-9.5%)approx
15 years, Can be extended.
Equity Linked Saving Scheme (ELSS)
Varies as it is Market Linked.
3 years, Can be extended.
National Saving Certificate (NSC)
6 years.
Term Policies
5 years or More
Unit Linked Investment Plan (ULIP)
Varies as it is Market Linked.
5 years or More.
Life Insurance/Flexi Insurance   Policies
Based on Maturity Term.

Apart from the above mentioned Investment options you can also claim deductions under Section 80D upto Rs 15,000/- on Premium paid on Health Insurance for Self,Spouse and dependent Children and further deduction upto Rs 15,000/- can be availed on premium paid on Health Insurance of dependent parents.


Contribution to Employees’ Provident Fund is also eligible for Tax Deduction. (Only employee contribution is deductable)

If an Individual is above 50 years or near about :-

Very long term Investment is not a viable option. Therefore possible Investment cum Tax Saving option will be:-

  • Investment in Retirement Plans for 10 years is a good option.
  • Health Insurance is very important to have at this age.
  • One can also look to invest in ELSS Scheme and NSC as they are available for shorter term.
If an Individual is around 40 years or below:-

  • Life Insurance Policies as could be a source of Investment cum Security Cover.
  • Public Provident Fund is also a very good option with stable return.
  • Term Policies offer Protection to dependents at affordable premium.
  • ELSS is a very good investment scheme offering good returns in Long run.
  • Health Insurance is also very important given the ever rising medical expenses.
Possible Investment if anybody is above 60 years of age:
  • NSC and ELSS are very good investment option.
  • Health Insurance is also a must.


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