In India, the most used tax saving clause is section 80C, which gives you the opportunity to save tax for income upto Rs. 1,50,000. This covers a lot of spectrum like EPF, PPF, NPS and Term/Endowment Insurance plans.Out of all these options, most of us opt of Endowment Insurance plans, which I consider the worst option due to its low returns and also low mortality coverage.
But to save tax, there are other alternate options, which none of us consider. Some of them are as below:
Donation to PMRF / Listed NGOs: Being emotional Indians, we donate generaously whenever we hear about some tragedy or someone is in need. But while donating, most of us do not know that whatever we are donating can be claimed absolutely tax free provided we donate to the right agency.
Saving in NPS: Starting current budget, the Govt has increased the tax benefits for National Pension Scheme by Rs. 50000 over and above total saving in 80C. So, if you have not opened an NPS account yet, you should get it opened immediately by contacting your bank.
Medical Insurance: If you are still out of medical insurance, its time to get one. Not only for tax saving, but considering the exponential medical costs and initial lock-in for some of the most common deseases, we should medically insure ourselves and families as soon as possible. By doing so, we can get tax benifit for upto Rs. 25000