1. Investment in different policies:
Investing in policies is one of the most effective ways to save huge amount of tax. Through investing PPF, Fixed Deposit for a period of 5 years or more, Pension Plans, etc. one can save tax up to a limit of Rs. 1 lac. This is provided in Section 80C, 80CCC and 80CCD of the Income Tax Act.
2. Medical Insurance:
If a person wishes to make investment in a medical insurance for himself, he can get a deduction of Rs. 15, 000. This deduction is allowed up to Rs. 20, 000 in case the assessee is a senior citizen. The age of the assessee has to be 65 years or more for the Assessment Year 2012-13.
3. Division of funds in the family:
Another way to reduce your tax liability is to divide the funds among the different members of your family. You can avail up to Rs. 2 lac as basic exemption. The exemption is even more in case of senior citizens.
4. Medical expenses:
Expenses incurred for treatment of many fatal diseases like cancer and aids can give deduction up to Rs. 40, 000.
5. Investment in New Pension Scheme:
NPS or New Pension Scheme has been introduced by the Government of India. Here people can claim a deduction as Tax free return. But withdrawal under the said system is taxable.
6. Expenses for a disabled dependent person:
Expenses made by any medical insurance for a disabled dependent person, one can get a deduction up to Rs. 50, 000 in cases the disablement is normal in nature. It can extend up to 1 lac if the disablement is a serious one.
7. Availing an education loan:
When someone avails a higher education loan, the same can provide a deduction and can thus reduce his tax liability to a great extent.
8. Contribution towards a superannuation fund:
Contribution towards a superannuation fund can give deduction up to Rs. 1 lac as it is tax free.
9. Medical allowance:
A person can get Rs. 15, 000 as medical allowance. But he has to furnish a bill is required to be as a supporting document.
10. Donation for charity:
Donation given to any charitable trusts and organizations can give total deduction. The same is also applicable in case of donations made to a political party.
11. Life Insurance Policy:
The best way to protect your family is to insure your family members. Go for Life Insurance Policies for members of the family.
