PPF, EPF, Sukanya Samriddhi: All you need to know about tax savings schemes

Individuals and HUFs can opt for a new tax regime from FY 2020-21 by giving up about 70 deductions/exemptions

The new tax regime comes with just a couple of deductions. Most significantly, a deduction for investments and expenses eligible under section 80C of up to Rs 1.5L is not available in the new regime. This has left steady investors of PPF, EPF, and other savings instruments in doubt about whether they should continue with these investments or not.

Individuals and HUFs can opt for a new tax regime from FY 2020-21 by giving up about 70 deductions/exemptions. The old regime allows for a deduction at the stage of investment which is unavailable in the new regime. While exemption for interest income and exemption on the maturity proceeds continues to be available in the new regime. So should one continue with these EEE investments? Let’s understand more.

In the table below, an individual having total income in the bracket Rs 5 to 15 lakh is tax neutral between the existing regime and new tax regime at the value of ‘Deductions’ indicated therein. Simply speaking, if one were to claim deductions as per column 2, tax outgo between the two regimes shall be the same. In a case the total deductions claimed exceed the value as per the ‘Deductions’ limit mentioned below, the old tax regime will be more beneficial, i.e. tax outgo will be lower in the old regime.

Want to save on tax? Here are deductions you can use while filing ITR

You can legally reduce your taxable income with these common tax-saving deductions

Let’s be honest, if given a choice, none of us would like to pay tax on the income we earn. But we have to and we should, because income tax is an important source of revenue for the government. This revenue is used by the government to build the nation. India is a developing nation and very few Indians earn an income that can be taxed. This is why if you’re one of those who earn a taxable income, you should proudly and honestly pay income tax.(economy policy)

But having said that, there are certain ways by which you can legally reduce your taxable income that you should make use of. The government allows for certain tax-saving deductions that you can use to lower your taxable income. You can effectively use these deductions to pay less tax. The following table lists common tax-saving deductions and their limits.

Section	Deduction on	FY 2016-17
Section 80C	Investment in PPF Employee’s share of PF contribution NSCs Life Insurance Premium payment Children’s Tuition Fee Principal Repayment of home loan NPS Investment in Sukanya Samridhi Account ULIPS ELSS Sum paid to purchase deferred annuity Five-year deposit scheme Senior Citizens savings scheme Subscription to notified securities/notified deposits scheme Contribution to notified Pension Fund set up by Mutual Fund or UTI Subscription to Home Loan Account Scheme of the National Housing Bank Subscription to deposit scheme of a public sector or company engaged in providing housing finance Contribution to notified annuity Plan of LIC Subscription to equity shares/ debentures of an approved eligible issue Subscription to notified bonds of NABARD	Rs. 1,50,000
80CCD(1B)	Additional contribution to NPS	Rs. 50,000
80TTA(1)	Interest Income from Savings account	Maximum up to 10,000
80GG	For rent paid when HRA is not received from employer	Least of rent paid minus 10% of total income Rs. 5000/- per month 25% of total income
80E	Interest on education loan	Interest paid for a period of 8 years
80EE	Interest on home loan for first-time homeowners	Rs 50,000
80D	Medical Insurance – Self, spouse, children Medical Insurance – Parents more than 60 years old	Rs. 25,000 Rs. 30,000
80DD	Medical treatment for handicapped dependant or payment to specified scheme for maintenance of handicapped dependant Disability is 40% or more but less than 80% Disability is 80% or more	Rs. 75,000 Rs. 1,25,000
80DDB	Medical Expenditure on Self or Dependent Relative for diseases specified in Rule 11DD For less than 60 years old For more than 60 years old For more than 80 years old	Lower of Rs 40,000 or the amount actually paid Lower of Rs 60,000 or the amount actually paid Lower of Rs 80,000 or the amount actually paid

All of these deductions are popularly known as Section 80 deductions. A taxpayer can claim the deductions that are applicable to him or her. (read more)