Tax Benefits with Investment Plans

Type of Investment

Tax Benefits

PPF

The amount invested is deductible under section 80C of Income Tax Act,1961 subject to the limit of Rs.1,50,000/- which includes deductions for other items as well. The maturity & interest amount earned in exempt under section 10 of the Act

Mutual Funds

Mutual funds consist of units invested in various funds like equity, debt or hybrid. 

The investment in Equity-Linked Mutual Fund schemes is eligible for tax deductions under Section 80C of the Income Tax Act.

Direct Equity

Investments are not eligible for tax deductions and the proceeds are fully taxable. 

Real Estate Investment

These investments are fully taxable, depending upon whether the investment is short term or long term.

Gold Investments

Investments in gold are fully taxable, depending upon whether the investment is short term or long term.

Post Office  fixed deposit

Investments in five-year deposits are eligible for tax deductions under Section 80C of the Income Tax Act. 

Company Fixed Deposits

Interest earned on fixed deposits is taxable.

IPOs

Investments in IPOs are not available for tax deduction and earnings are treated as capital gains, which attract taxes.

ULIPs

Premiums you pay for your ULIP are eligible for tax benefits under Section 80C of the Income Tax Act 1961. You can claim a maximum deduction of Rs. 1, 50,000 per year under this section, subject to the conditions mentioned therein. 

Tax exemption on maturity proceeds will be available on ULIP plans if premium paid in any of the years does not exceed Rs.2,50,000 and the same does not exceed 10% of the death sum assured.

The death benefit paid to your beneficiary or nominee is not taxable. They will receive the entire sum assured without having to pay any tax.

Bonds 

Interest earned and capital gains on bonds are taxable.  

Bank FDs

Interest earned on fixed deposits is taxable. However, benefit is available to senior citizens up to Rs.50,000/-

SCSS

Investments are tax deductible under Section 80C subject specified limit of Rs.1, 50,000/- Interest earned is taxable. However, senior citizens can claim a deduction of up to Rs. 50,000 per year on interest earned under Section 80TTB#

NPS

Deduction of contribution to NPS can be claimed under section 80CCD of the Income Tax Act,1961 including additional deduction of Rs.50,000/- under section 80CCD(2) #. However, total deduction shall not exceed Rs.1, 50,000/- as prescribed under section 80CCE#.

Up to 60% of the maturity corpus can be withdrawn tax-free.

Life Insurance

Premiums you pay for your life insurance plans are eligible for tax benefits under Section 80C of the Income Tax Act 1961*. You can claim a maximum deduction of Rs. 1, 50,000 per year under this section, subject to the conditions mentioned therein. 

Maturity benefits are exempt for policies where premiums paid in any of the years are less than Rs.5 lakhs and the same does not exceed 10% of the death sum assured.

The death benefit paid to your beneficiary or nominee is not taxable. They will receive the entire sum assured without having to pay any tax.