How to maximize your Tax savings Under Section 80C of Income Tax Act of 1961

TOTAL REBATE ALLOWED IS 125000

(I)                100000 through investment qualified under section 80C as defined below

Options:

·                  Market Linked – ELSS / ULIP

·                  Fixed Income - PPF / NSC / Senior Citizen Savings Schemes / EPF / NABARD BONDS / Tax Savings Fixed Deposit.

·                  Others – Life Insurance Premium /Repayment of House Loan (Principal)/Children Tuitions Fee’s

Details also available at our website www.i2isolutions.org/tax_savings.htm

TAX SAVINGS OPTION RECOMMENDED UNDER 80C FOR REBATE OF EQUAVALENT AMOUNT UPTO ONE LAKH UNDER 80C OF INCOME TAX ACT 1961

1-      FIXED DEPOSITS – Investment tenure 5 years

National Housing Board (NHB) Suvridhi Tax Savings (Under 80C) Fixed Deposit Scheme

Investor Category	Period	Interest Rate(%.p.a)	Maximum Deposit	Maturity Value	Yield (%.p.a)	Effective Annual Yield(%.p.a.) –including Tax Saved in Highest Slab of30%
General	60 Months	9.25	100000	157970	11.59	17.77
Sr. Citizen	60 Months	9.85	100000	162670	12.53	18.71

2-      Mutual Fund – Investment tenure 3 years

 Tax Savings Equity Linked Savings Scheme’s

Scheme 1 year 2 year 3 year AXIS EQUITY LONG TERM FUND 17.70 15.60 13.60

Performance Track Record of suggested scheme as on date.

(II)             Additional Rs. 25000 through investment in RGESS qualified under section 80CCG

RAJIVE GANDHI EUITY SAVINGS SCHEME Under section 80CCG

·         Investment Tenure 36 months

·         One time investment opportunity in life time for additional exemption of Rs. 25000 income(over & above one lakh) if the applicant has never traded Shares via DMAT account & has gross Annual Income less than 12,00,000/-

·         The exemption is available to invest up to Rs.50000 to get rebate of Rs. 25000.

·         Eligible Scheme available only at the moment is HDFC RGESS from HDFC Mutual Fund & LIC NOMURA RGESS from LIC Nomura Mutual Fund

What is - U.S. Fed Tapering - very much in news in recent times

An interesting story will make it understand better…

Mr. Chintamani owns a small sweet shop in Delhi. His wife Bhagyawanti is a home maker and takes care of their two kids Arnab and Barkha who study in college.

Chintamani with great difficulty sets aside Rs. 15,000 a month for household expenses. This amount is sufficient to run the house but not enough to fulfill Arnab and Barkha's growing needs of entertainment and extra-curricular activities.

Arnab and Barkha remain dejected and left out from their peers as they don't have enough pocket money to spend.

Chintamani cannot withstand his kids' sadness and decides to increase the monthly household expenses. He sets aside an additional Rs. 5,000 a month as pocket money as long as the kids behave well, study diligently and score good marks in exams. He wanted to fulfill all their wishes and hobbies even though he had to put an extra effort to earn that incremental Rs. 5,000 every month.

This made Arnab and Barkha happy as they could now do everything that their friends could do or afford. This positive energy reflected into their studies and they scored well in their college exams.

Chintamani and Bhagyawanti knew that their kids are now ready to take on the challenge to earn their own livelihood and become financially independent. So, they decide to gradually reduce Arnab and Barkha’s pocket money by 5% every month till the time they find a part-time job for themselves of their choice.

This process of gradual roll back of pocket money is similar to tapering under way by the U.S. Federal Reserve (popularly known as Fed).

What is tapering?

Tapering refers to the reduction in the quantum of the bond buying programme by the Fed.

The bond buying, also known as the Quantitative Easing (QE) program was launched to kick-start hiring and growth in the US economy. The Fed's first QE program was launched in the midst of the 2008 financial crisis.

But why is Fed tapering now?

The Fed's decision to taper its massive bond buying is due the recovery in the US job market and the confidence that the economy will continue to grow inspite of the tapering.

Hope the above explanation would have given you an idea of the Fed tapering.

Excerpts from TATA MUTUAL FUND. Just name of the character has been changed…