Besides change in the Minimum Income Exemption limit, the finance minister also doled out tax saves by way of increasing the overall limit of Section 80C investments. The amount you can claim for financial year 2014-15 under Section 80C is Rs 1,50,000. Section 80C has a twin benefit – you get deduction for the amount you invest and on the other hand your money goes into tax savings instruments and grows. Although there has been no change in the type of qualifying investments under section 80C – you are now allowed to invest Rs 1,50,000 in a year in your PPF account.
PPF is the most popular traditional investment and savings avenue. You can easily open a PPF account with banks which have been earmarked for this purpose. Check whether PPF accounts are maintained at your branch. Some of these banks allow you to access your PPF account details online and you can easily transfer money from your savings account to your PPF. In case you have your PPF account with one of the old nationalized banks, you may be required to maintain a pass book, and get it updated by physically visiting your bank, whenever you make a deposit or 2-3 times in a year.
The minimum investment required is Rs 500 every year to keep the PPF account active. You can make this deposit at any time during the year, however, you will earn maximum interest when you deposit in your PPF account at the start of a particular financial year. Do try to avail the benefit of investing Rs 1,50,000 in your PPF account, put the money in it when you can. Interest earned on your PPF account is entirely tax free and is better than what most FDs can bring you these days. It is also considered as a highly safe investment and you can remain invested in the corpus for 15 years. You may also be allowed to take loan against your PPF balance.
With the change in the minimum exemption limit (increased by Rs 50,000) and when you take full benefit of Section 80C deductions (an additional Rs 50,000) – on an income of Rs 5,00,000 you could end up saving Rs 10,300 on taxes! See below. That is a significant amount to save in taxes –Take time out during the long weekend to plan your 80C deductions!
In our next post we will look at the housing loan benefits change that has been brought in for the current financial year. In case you have any queries please do reach out to us firstname.lastname@example.org