My question might seem like a very silly for many of you. But I feel it is time that I should understand this.
I work for a corporate company, like others, I am also following the same process in tax declaration and IT returns every year. But frankly accepting the truth that I barely have any knowledge of it.
Here I have a basic doubt on 80C category. 80C is the mostly heard tax benefit where all our insurance and other stuffs are included and upto 150000/- can be invested to avail tax benefit.
My question is:
- When it is said that 1.5 lacs investment under 80C, does this include 80CCD and 80CCG as well?
- If I choose to invest in Voluntary Provident Fund (VPF), will that be also part for 1.5 lacs under 80C.
- For example, currently if I have 2 insurance of 50k each and I have choose to invest in VPF 10k per month.
Insurance 1 : 50000
Insurance 2 : 50000
VPF for 12 months : 120000
Total : = 220000 /-
Limit for 80C – 150000/-
Hence (Total – Limit for 80C) = 220000-150000 = 70000/-
Now the question, is this excess 70K is taxable for me? On top of this, If I want invest in PPF, will that also be taxable?
Can you please advise, how investment can be planned for 1.5 lacs effectively?
Also, it would be grateful, if you can suggest me some other option in tax saving apart from 80C.
Any explanation is much appreciated. Thanks in advance.
- The combined limit of Rs.1.5 lakh available under Sec.80C, Sec.80CCC, and Sec.80CCD(1).
- Whether you invest in PPF or VPF, anything more than Rs.1,50,000 under Sec.80C will not be available for tax deduction. Hence, you have to pay the tax on that.
Think first about your financial goals. While choosing the assets or products to invest, identify the tax saving options. You are doing the reverse. The priority should be to reach your financial goals and second priority should be to save tax WHILE investing. The main purpose of investing should not be TAX SAVING.
Refer my post regarding other options available for tax saving “Tax Savings options other than Sec.80C for FY 2017-18