Page 29 - Banking Finance February 2018

ARTICLE

Scheme Lock-in period Tax on interest / Leverage
dividend

PPF 15 Years Not taxable Best for those who can compromise with liquidity.
NSC, tax saving 6, 5 years Taxable Bad option, as income is taxable, but good for
fixed deposits those who need money back soon.
ELSS (Equity linked 3 years Not taxable Best for those, who can take risk. It is an
saving scheme) investment of category "high risk, high gain".
Life insurance As per plan Not taxable Not a good idea, due to big lock-in period and very
premium low gains. However, one must take a pure term
plan as per one's income and requirement.

Provident fund Normally till Not taxable It is compulsorily deducted, so no choice. However,
contribution by retirement one can get additional deduction, as interest
employee to a earned is tax free like PPF.
recognized fund
Sukanya Samriddhi 21 years or till Not taxable Best for those who can compromise with liquidity.
account the marriage of Interest rate is more than PPF.
the girl child
Senior Citizen Saving 5 Years Taxable Good for those retired persons whose income is
Scheme (SCSS) within Nil tax bracket.

For those, who can not afford to invest under section gratuity, commuted pension, leave encashment etc is
80C, they must seek following two options which are lower, if one is retired in the beginning of the financial
like expenses but covered under section 80C. year, employees should plan their voluntary retirement
Y Tuition fees paid for self and upto two children to in the beginning of the financial year.
the extent of Rs 1.50 lakhs.
9. Loans on simple interest: Employees should not prepay
Y Repayment of principal of housing loan to the housing, car and demand loans which employer extends
extent of Rs 1.50 lakhs.
at simple rate of interest. If one has surplus funds, one
should invest them in other good avenues rather than
5. Deduction under section 80 CCD (1B): Maximum Rs
repaying subsidized loans. However, income tax is
0.50 lakh can be availed under this section by investing
payable on subsidized portion.
in NPS (National Pension scheme). This deduction is over
and above Rs 1.50 lacs deduction of section 80C. 10. Interest payment on home loan: Under section 24 (b),
interest on home loan availed for house is
6. More Deductions beyond section 80 C: There are many deductiblefrom Income from House property. Following
more deductions under sections 80D to 80U which points are worth noting in this regard.
certain persons can avail themselves of, if eligible. Y If house is not let out, it can be self occupied or
deemed to be self occupied under certain
7. Interest on saving bank: it is exempted to the extent conditions. In such cases, maximum deduction will
of Rs 10000 per annum under section 80TTA. Besides, be Rs 2.00 lacs subject to fulfilment of the following
Post office savings account interest is exempt upto Rs three conditions. (i) loan is availed on or after
3500 in case of a single account and Rs 7000 in case of 01.04.1999, (ii) loan is availed for the purpose of
a joint account. purchasing or constructing a house property (iii)
Construction / possession is completed within 5
8. Voluntary Retirement planning: As incidence of tax on years from the end of FY of borrowing.

BANKING FINANCE | FEBRUARY | 2018 | 29

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