The time for tax planning for the financial year 2025-26 is here, and if you want to avoid last minute rush before the end of the financial year, then the month of December is most important for you. This is the right time to finalize your investment strategies for effective tax savings. Action is necessary now to avail maximum benefits under Section 80C, 80D and 80G of the Income Tax Act. By investing in these streams you can not only reduce your tax liability but also secure your future. Let us know what are those special investment options which you should include in your portfolio before the end of December.
Means of tax saving under section 80C
life insurance
Life insurance premium paid by the taxpayer is tax exempt under the Income Tax Act. In insurance, plans like Term Plan, Savings Insurance Solution, Wealth Solution, Retirement Plan and Combination Solution are available. According to Tataia, life insurance premiums and quotations may change depending on the features and riders of the plan. Therefore, you can save tax by customizing the plan as per your financial needs.
Sukanya Samriddhi Yojana
This is a popular government savings scheme launched for daughters up to 10 years of age. Tax deduction is available under Section 80C on the amount invested in this. You can start investing in it.
Investing in ELSS is also an option
Equity Linked Savings Scheme is a mutual fund scheme that offers returns linked to the equity market. It also offers the benefit of tax exemption under Section 80C, but it has a mandatory lock-in period of three years.
Other Popular and Safe Investment Options
Investments made in these are also eligible for tax deduction up to a maximum limit of ₹ 1.5 lakh, like Public Provident Fund (PPF), National Savings Certificate (NSC), Senior Citizen Savings Scheme for senior citizens i.e. SCSS. Apart from this, one can invest in FD with a lock-in period of 5 years.
Real Estate Tax Benefits
The principal amount repaid in monthly installments of home loan is also eligible for tax deduction under Section 80C. This benefit is applicable after completion of construction or purchase of the house. Also, if you build a house or buy property, you can also avail tax benefits by deducting the amount spent on stamp duty and registration from your gross income after getting full ownership.
Tax Saving Option under Section 80D
Buying a Health Insurance Policy
Buying a health insurance policy is an essential thing to avail tax exemption under Section 80D of Income Tax. Therefore, Section 80D provides the benefit of tax deduction to those taxpayers who have made efforts in this direction. Any individual or HUF can claim deduction from their gross income on paying medical insurance premium for any year. Under this section, any person can avail the benefit of up to ₹ 25,000 in a financial year. And, for senior citizens this limit is ₹50,000.
Provision of tax exemption under section 80G
The Government of India, in gratitude to taxpayers who contribute to certain funds set up for social welfare, provides them the benefit of tax savings under Section 80G. This exemption is applicable to individuals, companies and firms. Some donations are 100% tax deductible with no qualifying limits. Like- Prime Minister’s National Relief Fund, National Defense Fund, Medical Assistance Fund for the poor established by the state government, etc. 50% tax deduction is available on some donations, such as Prime Minister’s Drought Relief Fund, Jawaharlal Nehru Memorial Fund etc.
(Disclaimer: This news is for information only. Consult your financial advisor before investing.)
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