In 80C Section, one can invest up to Rs. 1,50,000 annually and save up to Rs. 1,50,000. Section 80C of the Income Tax Act, 1960 allows you to save up to Rs. 1,50,000 annually.
Investment options available in this section include:
- The National Pension System (NPS):
Among the pension schemes offered by the Indian Government is the National Pension Scheme, which provides pensions to those working in the unorganized sector and those in the workforce. A citizen of any state can open this account. There is no maximum contribution limit. Investments of up to Rs. 50,000 can be used to qualify for tax deductions under Section 80CCD. Over and above the maximum limit of section 80C (Rs.1.5lacs), this limit of 80CCD is deductible.
- EPF (Employee Provident Fund):
12% of a salaried employee’s basic salary + DA is deducted by an employer and deposited into the EPF or another recognized provident fund. Employees with a basic salary of 15000 per month are eligible to open an EPF account. A minimum contribution of 12% basic pay and deductions must be made by the employer and employee in order to participate in this scheme. After 5 years of continuous service, you can withdraw your entire PF balance plus interest tax-free.
- Fixed Deposits with a 5-year tax saving:
Fixed deposits that are tax saving (FDs) are defined under section 80C of the Indian Income Tax Act, 1961. For a period of five years, this type of deposit is locked in, and the maximum deduction an investor can claim is Rs 1.5 lakh. The FD offers 100% capital security as well as a guaranteed return on investment.
In order to calculate income tax, which all sources must be included?
Income from various sources must be included while using an easy tax calculator. Here are some examples:
a) Salary income:
Generally speaking, Gross Total Income refers to the income from one’s salary. There are several components of our salary that combine to make Gross Total Income, including:
- Wage Basics
- DA (Dearness Allowance)
- In that financial year, any annuities & gratuities received
- Expenses related to transportation, medical care, etc.
- Leave Travel Allowance (LTA) or any other special allowances received
b) The rental income from house properties is as follows:
Renting a private property or a commercial property is considered to be an income derived from renting a property.
c) Capital Gains Income:
A capital asset is taxable if profits or gains arise from its sale or transfer (such as stocks, mutual funds or real estate).
d) Business/Professional Income:
There are a variety of income sources that can be included in this category, including those generated by a business or profession.
e) Other income:
There is a general principle that any income that arises from other sources, such as the interest from a savings account, the interest from a fixed deposit, or the interest from bonds, will be taxed.
What is the tax exemption amount?
An individual is exempt from taxation under both the old and new tax regimes if his/her income is below Rs 2,50,000. Income above Rs 2.5 lakhs is taxed according to the tax slabs defined by the government.
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