Where Should You Invest to Save Income Tax (April to March) | FinCalC [Video]

It's almost the end of November and you guys must be receiving emails from your employer to declare the actual investment made in the Financial Year 2018-19.

Just to give idea to beginners, in almost every organization we are asked to declare the 'Estimated Investment' in the month of April every year, in order to calculate our Income Tax. From the month of December, our 'Actual Investments' are used to calculate Income Tax and corrections are made based on our Actual Investments.

We can also invest until the month of March in a particular Financial Year, and claim for refund in our ITR if extra income tax is deducted from our salary. It's important to note that our Income Tax is calculated based on Actual Investments that we have made throughout the Financial Year, that is from April to March of next year, irrespective of whether we are working as an Employee or as a Businessman or a Pensioner.

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So where you can invest in the remaining months from December to March in order to save maximum Income Tax:

1. SECTION 80C (Max limit Rs. 1,50,000)

This is the most popular section that allows you to claim maximum deductions of Rs. 1,50,000 in a Financial Year. This section includes following schemes:

Public Provident Fund 

15 years lock-in period. Click here for more information.

Employee Provident Fund 

This is automatically deducted from your salary if you are working as an Employee.

Equity Linked Savings Schemes

These are special kind of Mutual Funds that allow you to claim deductions in a Financial Year. These have 3 years as lock in period.

Life Insurance Premiums 

The life insurance premiums that you have paid in a financial year can be used to claim deductions under this section.

5-year Fixed Deposits 

Investments made in minimum 5-year fixed Deposits. No other fixed deposit having less tenure can be used to claim deductions.

2. SECTION 80CCD(1B) (Max limit Rs. 50,000)

This includes National Pension Scheme where you can invest up to Rs. 50,000 and claim deductions under Section 80CCD(1B).

This is separate from Section 80C and makes a total of Rs. 2,00,000 which can be claimed including Section 80C and Section 80CCD(1B)

3. SECTION 80D (Max limit Rs. 55,000)

This includes premiums for medical Insurance for self, family and your parents.

Rs. 25,000 as medical insurance premiums for yourself and your family which may include spouse and childrens.

Rs. 30,000 for your parents in case any one of your parent is a Senior Citizen.

This makes a total of Rs. 55,000 to be claimed as deduction under Section 80D.

4. SECTION 80EE (Max limit Rs. 50,000)

If you have a Home loan for the first time on your name and paying EMI for same, you can claim a maximum of Rs. 50,000 for the interest that you pay for your home loan.

5. SECTION 80GG (Max limit Rs. 60,000)

This includes House Rent amount that can be claimed under this section if not claimed in any other section. This includes a maximum of Rs. 60,000 to be claimed in a year if you pay for your House Rent.
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So these are some of the sections where you can invest in order to save income tax in the remaining months from December to March.

Don't panic. We still have 4 months to invest and save some Income Tax. Try to max out Investments in Sections 80C and 80CCD(1B). This will save you a total Income Tax of Rs. 10,400 if you fall under 5% Tax Slab and Rs. 41,600 if you fall under 20% Tax Slab.

Plan accordingly and invest smartly before March.

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