Final Project

Taxation policies and its effect on investment practices of the
employees
Chapter 1
Introduction
Every taxpayer wants to save income tax. The good news is that a lot of tax saving is indeed
possible through proper planning all within the provisions of Tax laws. A well informed tax
payer is legally as well as ethically in saving tax by making use of all such provisions existing in
the Income.Tax.law.Every.assesses liable to pay tax needs to manage his/her taxes. Tax
management relates to the management of finances for payment of tax, In order to tax
individuals or employees on basis of their earnings (higher tax pay for high income group and
lower tax pay for lower income group) income tax department levies income tax on individuals
on basis of certain range. This range is known as income tax slab rates wherein the individual
has to pay tax depending on his earning capacity. But employees can reduce the tax burden
through the investing on the tax saving investment policies based on their investment practice
getting tax benefits on their income.
While there are many tax-saving policies available, good financial planning involves maintaining
a right mix of investments in debt and equity-related instruments, which not only save tax but
also benefit you financially.
Its January 2017 and everyone is busy looking at best tax saving policies investment options to
save income tax under section 80C. From Financial year 2015-16 onwards, 80C deduction limit
has been increased from Rs 1 Lakh to Rs 1.5 Lakhs. You can save tax as high as Rs 46,350 by
investing the maximum eligible amount of Rs 1.5 Lakhs u/s 80C. What are the various best taxes
saving investment options available in 2015 in India to save tax u/s 80C? What is the tax saving
options for salaried employees? Which top tax saving policies investment options in 2016 helps
you save tax and provide good returns to you? Which is the tax saving options under 80c?
Under Section 80C of the Indian Income-Tax Act, 1961, an individual or employee can invest
up.to.Rs1.5.lakh,.which.includes.investments.in.Public.Provident.Fund,.National.Pension.Schem
e,Equity.Linked.Savings.Scheme,Unit.Linked.Insurance.Plans,PPF,NPS(new.provident.scheme),
Elss(equity.linked.savings.scheme),Ulips(Unit.linked.insurance.plans),EPF(employees provident
fund ), Senior citizens saving scheme ,Life Insurance Premium, PensionFund, BankDeposits
Taxsaving.fixed.Deposit,Section.80D:.Medical.Insurance,Section.80CCG:Rajiv.Gandhi.Equity.S
Institute of management studies & research Page 1

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aving.Scheme(RGESS),InfrastructureBonds, VoluntaryProvident Fund (VPF),Pension/ Annuity

Schemes, Sukanya, Post, small saving schemes, Here are some investment options that not only
save tax, but also yield higher returns in the long run.
Effect on taxation policies:
Efficiency of the tax system components is one of the basic conditions that ensure the formation
of public funds to finance the estimated public expenditure and ensure a budget balance, in direct
relation to the possibilities of tax payers tax expression .the efficiency of the tax system is
analyzed by the effects taxation produces on tax payers and how the tax principles are respected
at the establishment of a tax. Fiscal or taxation principles were promoted by the classical
economic school representatives, developed by the specialized literature but also covered by
specific legislation. In this context the establishment of the super excise on fuel and the tax on
special constructions are relevant case studies to provide some relevant conclusions on the
efficiency of the tax system in Romania and on the way in which the fiscal budgetary principles
are respected.
Literature review:
Avinash Kumar Singh (2006) the study analyzed the investment pattern of people in Bangalore
city and Bhubaneswar & analysis of the study was undertaken with the help of survey method.
After analysis and interpretation of data it is concluded that in Bangalore investors are more
aware about various investment avenues & the risk associated with that. All the age groups give
more important to invest in equity & except people those who are above 50 give important to
insurance, fixed deposits and tax saving policies benefits.
Karthikeyan (2008) has conducted research on Small Investors Perception on Post office Saving
Schemes and found that there was significant difference among the four age groups, in the level
of awareness for kisan vikas patra (KVP), National Savings Scheme (NSS), and deposit Scheme
for Retired Employees (DSRE), and the Overall Score Confirmed that the level of awareness
among investors in the old age group was higher than in those of young age group.

employees
Suresh(2016) for saving income tax in your earnings individuals to invest some of the tax saving
investment avenue for example Public Provident Fund, National Pension Scheme, Equity
LinkedSavings.Scheme,.Unit.Linked.Insurance.Plans,PPF,NPS(new.provident.scheme),Elss(equi
ty.linked.savings.scheme),Ulips(Unit.linked.insurance.plans),EPF(employees provident fund ),
Senior citizens saving scheme ,Life Insurance Premium, Pension Fund, Bank Deposits Tax-
saving fixed Deposit, Section to invest those investments individual can get the tax benefit under
section 80C up to Rs 1.5 Lakhs. You need not consider all options. You can consider some of
these investmentoptions which are best suitable to you based on your investment tenure and
features indicated.
Srekantaradhaya (2000), made study on The Structure and Reforms of Taxation in India
in this article author presented the broad picture of reforms that were implemented in respect of
taxation and tax saving investment as a part of economic reform during the period 1990-91 to
1998-99. For the purpose of study, tax structure prior to 1991 was analyzed and the changes that
had taken place in post 1991 period were evaluated. The study revealed the major deficiencies of
the personal income tax system in India.
Satya Narayan Mittal (1986), made study on Central Taxation of Income in India in this
article author attempted to evaluate, assess and discuss the history of income tax laws from 1951
onwards, various tax provisions had been cross examined and concrete suggestions given to
rationalize the tax saving and to make it more conducive to economic growth.
Rajiv Kaushik (July 2012), made a study on Assessment of Individual Income Tax Planning
and Saving policies in India in this article author explains that in India tax system is a three
tier system which based between the central government, state government and local
organization. Individual income tax is a subject matter of central government, If individual want
to assess income tax then they should have knowledge of individual income tax structure. An
individual who want to do tax planning and savings first step is to calculate total income then
compute the income tax by deduction and adjustment in total income as per tax table structure.

employees
CA Shilpa Vasant Bhide (December 2013), made study on A Study of policies ofTax
Planning amongst salaried assessee the term income means regular sources of monetary
returns. The total income of person is computed under following five heads namely salary
income, income from house property, income from business and profession, income from capital
gains, income from other sources. The objective of tax planning is to reduce the tax liability to
the minimum. It is futuristic in approach. It is a wide concept and includes Tax Management. The
benefits of tax planning are substantial in the long run. However many times the assesses does
not seek professional advice, when they are salaried employees professional advice is sought by
business entitled and businessmen and especially when they are subjected to tax audit. However
individual assesses do not seek much help. This result in tax planning done in hapha-hazard
manner .This is turn effects their investment management. The paper tries to trace the awareness
of Income Tax savings and tax planning amongst salaried assesses.
Savita (May 2013), made a study on Income Tax Planning: A Study of Tax policies
Instruments this article author specifies thattax planning is an essential part of our financial
planning. Efficient tax planning enables us to reduce our tax liability to the minimum. This is
done by legitimately taking advantage of all tax exemptions, deductions rebates and allowances
while ensuring that your investments are in line with their long-term goals. The purpose of the
study is to find out the most suitable and popular tax saving instrument used to save tax and also
to examine the amount saved by using that instrument. Over all findings reveals that the most
adopted tax saving instrument is Life Insurance policy, which got the first rank in this study and
the second most adopted tax saving instrument is Provident Fund.
LokeshGautham (May 2013), made a study on Income Tax Planning; A Study of Tax
Saving policies Instruments, in his article he stated that overall study reveals that the most
suitable and popular tax saving instrument used to save tax and also to examine the amount
saved by using that instrument. The most adopted tax saving instrument is life insurance policy,
which got first rank in his study and the see and most adopted tax saving instrument is national
saving certificate.

employees
CA Sandeep Kanoi (2013) Tips to save Income tax for Salaried Personinvestment for most
individuals begins and ends with tax planning. Although it is pertinent to avail tax breaks, this
should not be the sole focus. Start by jotting down your key financial objectives, the tentative
time of money requirement and the corpus needed to achieve those goals. One can use tax saving
investments effectively, to achieve financial goals. For example, one can take a childrens plan
that also provides tax benefit. Consider the impact of inflation on your needs. After your first few
working years, as income goes up, it is wise to invest beyond ones tax saving investments to
achieve your goals. Also, evaluate the life cover requirement, while planning for your taxes. We
are giving below a brief on some of the popular allowance / Exemption and deductions, benefit
of which can be taken by the salaried taxpayers to reduce their tax burden.
Sunil Dhawan(07 December, 2015) How To Plan For Tax savingpoliciesThe income tax act
provides for certain deductions that an individual may claim and thus reduce the gross total
income thereby reducing you tax liability. These benefits are largely confined to Section 80C of
the Income Tax Act. According to Section 80 C, an amount equal to the investment that you
make in certain specified instruments or an expense that you incur up to a maximum of Rs 1.5
lakh.in.a.financial.year.reduces.your.GTI.by.the.same.amount.This.in.effect,reduces.your.taxable
.liability.and,therefore.the.tax.payable.

employees
Chapter 2
Research design
Statement of the problem:
Taxpayer will reduce tax liability and pay less tax by taking the advantages of potential savings
Policies. An individual assesses can claim the deduction under sec 80C to 80U. By effective tax
planning a taxpayer will invest his money in some goods funds which will result in productive
returns for tax payer and transfer money to government for investment too. Savings result in
investment which will result in employment generation and thereby growth of society as well as
economy. And also it satisfies the publics expectation with regards to its interaction with
revenue and service. Hence this study attempt knows tax saving policies investment and tax
saving policies investment practice of individuals or employees.
Scope:
Salaried employees have fix flow of income & their investments patterns are also different. In
this study will help to find out employees investment practices towards tax saving. The study
will also throw a light on the awareness of the tax saving investments avenues available in India.
Taxation is considered as a complex matter affecting the financial planning of each individual
income tax assesses. The study is confined to know the tax management practices for salary
earning employees.
Need for the study:
The study is to intend to understand the employees investment practice towards tax saving
investment avenues. And also it helps tocreating awareness to individuals tax saving plans on
their income.
Objective:

employees
To understand in depth about different investment avenues available in India.

To find out how investors get information about the various financial instruments.
The type of financial instrument, they would prefer to invest.
What are the factors that they consider before investing?
To identify the objective of saving of an investor.
Source of data collection:

Primary data
Information is collected by conducting a survey by distributing a questionnaire to the
government employees in various places around shimoga. Those employees are different age
group, different occupation, different income levels, and different qualification.
Secondary data
This data is collected by using the source-
Article in newspapers, Publication and journals.
Experts opinion published in various print media.
Book written by various foreign and Indian authors on investments.
Data available on internet through various websites.
Sampling technique
The sample size of the study is 50 respondents elected in various places around shimoga by using
random sampling and area sampling method.
Tools and technique use:

For analysis and interpretation of data, the tools are used like frequency table, graphs; charts
have been used for easy and clear understanding of collected data or information relating tax
saving investment practice.
Limitation:
As the analysis is based on primary as well as secondary data, possibility of unauthorized
information cannot be avoided.
In this only concentrated on the individual tax saving not other incomes.
This study confined to individual assesses in Kuvempu University.

employees
Chapter 3
Conceptual framework
In order to Indian tax act 1961 an individuals or employees on basis of their earnings they have
to pay tax. Higher tax pay for high income group and lower tax pay for lower income group,
income tax department levies income tax on individuals on basis of certain range. This range is
known as income tax slab rates wherein the individual has to pay tax depending on his earning
capacity. Current slab rate for FY 2016-17 is mentioned below for reference:
Income Tax Slabs and Rates for the Assessment Year 2017-18 (applicable on income earned
during 01.04.2016 to 31.03.2017) for various categories of Indian Income Tax payers. Mainly
Indian income tax authority classified the individuals as a 3 groups there are below :( This tax
slab only apply for Indian resident only)
Individual resident aged below 60 years
Senior Citizen60-80 years
Super Senior Citizen above80 years
1. Individual resident aged below 60 years (i.e. born on or after 1st April 1956)
Income Tax: TaxCalculator: AY 2017-18
Income Slabs Tax Rates

Where the taxable income does not exceed Rs. NIL
2, 50,000/-.
Where the taxable income exceed Rs. 2, 10%
50,000/- but does not exceedRs. 5, 00,000/-.
Where the taxable income exceeds Rs. 5, 20%
00,000/- but does not exceed Rs. 10, 00,000/-.
Where the taxable income exceeds Rs. 10, 30%

employees
Income Tax: TaxCalculator: AY 2017-18
00,000/-.
Surcharge: 12% of the Income Tax, where taxable income is more than Rs. 1 crore.
Education Cess: 3% of the total of Income Tax and Surcharge.
2.senior citizen ( individual resident who is of the age of 60 years or more but below
the age of 80 years at any time during the previous year i.e. born on after 1 stApril
1936 but before 1stApril 1956 )
Income tax calculator Ay 2017-18
Where the taxable income does not exceed Rs. NIL
3, 00,000/-.
Where the taxable income exceeds Rs. 10%
3,00,000/- but does not exceed Rs. 5,00,000/-
Less : Tax Credit u/s 87A - 10% of taxable
income up to a maximum of Rs. 2000/-
Where the taxable income exceeds Rs.
20%
5,00,000/- but does not exceed Rs. 10,00,000/-
10,00,000/-

employees
3. Super senior citizen (individual resident who is of the age of 80 years or more at
any time during the previous year i.e. born before 1stApril1936)
Income tax calculator Ay 2017-18
Where the taxable income does not exceed NIL
Rs. 5, 00,000/-.
5,00,000/- but does not exceed Rs.
10,00,000/-
10,00,000/-
What is Tax Deduction?

Tax deduction helps in reducing your taxable income. It decreases your overall tax liabilities and
helps you save tax. However, depending on the type of tax deduction you claim, the amount of
deduction varies. You can claim tax deduction for amounts spent in tuition fees, medical
expenses and charitable contributions. Also, you can invest in various schemes such as life
insurance plans, retirement savings schemes, and national savings schemes etc. to get tax
deductions. The government of India offers tax exemptions for various expenses incurred in
different activities to encourage individuals and commercial institutions take part in activities
having social benefits.
A number of day-to-day expenditures qualify for deductions, with information about them being
crucial to help us save money. Tax deduction can be claimed on money spent for education,
medical expenses, charitable contributions, investments in insurance, retirement schemes, etc.
These deductions have been put in place to encourage members of the society to participate in
certain useful activities, helping everyone involved in the process.
Tax Deductions under Section 80C:

employees
Section 80C of the Income Tax Act provides provisions for tax deductions on a number of
payments, with both individuals and Hindu Undivided Families eligible for these deductions.
Eligible taxpayers can claim deductions to the tune of Rs 1.5 lakh per year under Section 80C,
with this amount being a combination of deductions available under Sections 80 C, 80 CCC and
80 CCD.
Some of the popular investments which are eligible for this tax deduction are mentioned below.
Payment made towards life insurance policies (for self, spouse or children)
Payment made towards a superannuation/provident fund
Tuition fees paid to educate a maximum of two children
Payments made towards construction or purchase of a residential property
Payments issued towards a fixed deposit with a minimum tenure of 5 years
This section provides for a number of additional deductions like investment in mutual funds,
senior citizens saving schemes, purchase of NABARD bonds, etc.
Subsections under Section 80C:

Section 80C has an exhaustive list of deductions an individual is eligible for, which have led to
the creation of suitable sub-sections to provide clarity to taxpayers.
Section 80 CCC: Section 80 CCC of the Income Tax Act provides scope for tax
deductions on investment in pension funds. These pension funds could be from any insurer
and a maximum deduction of Rs 1.5 lakh can be claimed under it. This deduction can be
claimed only by individual taxpayers.
Section 80 CCD: Section 80 CCD aims to encourage the habit of savings among
individuals, providing them an incentive for investing in pension schemes which are notified
by the Central Government. Contributions made by an individual and his/her employer, both
are eligible for tax deduction, subject to the deduction being less than 10% of the salary of the
person. Only individual taxpayers are eligible for this deduction.
Section 80 CCF: Open to both Hindu Undivided Families and Individuals, Section 80
CCF contains provisions for tax deductions on subscription of long-term infrastructure bonds
which have been notified by the government. One can claim a maximum deduction of Rs
20,000 under this Section.

employees
Section 80 CCG: Section 80 CCG of the Income Tax Act permits a maximum
deduction of Rs 25,000 per year, with specified individual residents eligible for this
deduction. Investments in equity savings schemes notified by the government are permitted
for deductions, subject to the limit being 50% of the amount invested.
Tax Deductions under Section 80D:
Section 80D of the Income Tax Act permits deductions on amounts spent by an individual
towards the premium of a health insurance policy. This includes payment made on behalf of a
spouse, children, parents or self to a Central Government health plan. An amount of Rs 15,000
can be claimed as deduction when paid towards the insurance for spouse, dependent children or
self, while this amount is Rs 20,000 if the person is over the age of 60 years.
Both individuals and Hindu Undivided Families are eligible for this deduction, subject to the
payment being made in modes other than cash.
Subsections under Section 80D:
Section 80D is further subdivided into two sub-sections, offering clarity on the benefits available
to taxpayers.
Section 80DD: Section 80DD provides provisions for tax deductions in two cases, with the
permitted deduction being Rs 75,000 for normal disability and Rs 1.25 lakh if it is a
severe disability. This deduction can be claimed in case of the following expenditures.
On payments made towards the treatment of dependants with disability
Amount paid as premium to purchase or maintain an insurance policy for such dependant
The permitted deduction is Rs 75,000 for normal disability and Rs 1.25 lakh for a severe
disability. Both Hindu Undivided Families and resident individuals are eligible for this
deduction. The dependant, in this case can be a spouse, sibling, parents or children.
Section 80DDB: Section 80DDB can be utilized by HUFs and resident individuals and
provides provisions for deductions on the expense incurred by an individual/family towards
medical treatment of certain diseases. The permitted deduction is limited to Rs 40,000,
which can be increased to Rs 60,000 if the treatment is for a senior citizen.
Tax Deductions under Section 80E:

employees
Under Section 80E of the Income Tax Act has been designed to ensure that educating oneself
doesnt become an additional tax burden. Under this provision, taxpayers are eligible for tax
deductions on the interest repayment of a loan taken to pursue higher education. This loan can be
availed either by the taxpayer himself/herself or to sponsor the education of his/her ward/child.
Only individuals are eligible for this deduction, with loans taken from approved charitable
organizations and financial institutions permitted for tax benefits.
Subsections of Section 80E:

Section 80EE: Only individual taxpayers are eligible for deductions under Section 80EE,
with the interest repayment of a loan taken by them to buy a residential property qualifying
for deductions. The maximum deduction permitted under this section is Rs 3 lakhs.
Tax Deductions under Section 80G:

Section 80G encourages taxpayers to donate to funds and charitable institutions, offering tax
benefits on monetary donations. All assesses are eligible for this deduction, subject to them
providing proof of payment, with the limit of deductions decided based on a few factors.
100% deductions without any limit: Donations to funds like National Defense Fund,
Prime Ministers Relief Fund, National Illness Assistance Fund, etc. qualify for 100%
deduction on the amount donated.
100% deduction with qualifying limits: Donations to local authorities, associations or
institutes to promote family planning and development of sports qualify for 100% deduction,
subject to certain qualifying limits.
50% deduction without qualifying limits: Donations to funds like the PMs Drought
Relief fund, Rajiv Gandhi Foundation, etc. are eligible for 50% deduction.
50% deduction with qualifying limit: Donations to religious organizations, local
authorities for purposes apart from family planning and other charitable institutes are
eligible for 50% deduction, subject to certain qualifying limits.
The qualifying limit refers to 10% of the gross total income of a taxpayer.

employees
Subsections of Section 80G:

Under Section 80G has been further subdivided into four sections to simplify understanding.
Section 80GG: Individual taxpayers who do not receive house rent allowance are eligible
for this deduction on the rent paid by them, subject to a maximum deduction equivalent to
25% of their total income or Rs 2,000 a month. The lower of these options can be claimed as
deduction.
Section 80GGA: Tax deductions under this section can be availed by all assessees,
subject to them not having any income through profit or gain from a business or profession.
Donations by such members to enhance social/scientific/statistical research or towards the
National Urban Poverty Eradication Fund are eligible for tax benefits.
Section 80GGB: Tax deductions under this section can be availed by Indian Companies
only, with the amount donated by them to a political party or electoral trust qualifying for
deductions.
Section 80GGC: Under this section, funds donated/contributed by an assesses to a
political party or electoral trust are eligible for deduction. Local authorities and artificial
juridical persons are not entitled to the tax deductions available under Section 80GGC.
Tax Deductions under Section 80 IA:

Section 80 IA provides an avenue for all taxpaying assessees to claim tax deduction on the
profits generated through industrial activities. These industrial undertakings can be related to
telecommunication, power generation, industrial parks, SEZs, etc.
The following subsections are related to Section 80-IA
Section 80 IAB: Section 80 IAB can be used by SEZ developers, who can claim tax
deductions on their profits through development of Special Economic Zones. These SEZs
need to be notified after 1/4/2005 in order for them to be eligible for tax deductions.
Section 80-IB: Provisions of section 80-IB can be used by all assessees who have profits
from hotels, ships, multiplex theatres, cold storage plants, housing projects, scientific
research and development, convention centers, etc.

employees
Section 80-IC: Section 80 IC can be used by all assessees who have profits from states
categorized as special. These include Assam, Manipur, Meghalaya, Himachal Pradesh,
Uttaranchal, Arunachal Pradesh, Mizoram, Tripura and Nagaland.
Section 80-ID: All assessees who have profits or gain from hotels and convention centers
are eligible for deduction under this section, subject to their establishments being located in
certain specified areas.
Section 80-IE: All assessees who have undertakings in North-East India are eligible for
deductions under this Section, subject to certain conditions.
Tax Deductions under Section 80J:

Section 80J of the Income Tax Act was amended to include two subsections, 80JJA and 80 JJAA
Section 80 JJA: Section 80 JJA relates to deductions permitted on profits and gains from
assessees who are in the business of processing/treating and collecting bio-degradable waste
to produce biological products like bio-fertilizers, bio-pesticides, bio-gas, etc. All assessees
who deal with this are eligible for deductions under this section. Such assessees can claim
deduction equivalent to 100% of their profits for 5 successive assessment years since the
time their business started.
Section 80 JJAA: Deductions under Section 80 JJAA can be claimed by Indian
companies which have profits from the manufacture of goods in factories. Deductions
equivalent to 30% of the salary of new full time employees for a period of 3 assessment
years can be claimed. A chartered accountant should audit the accounts of such companies
and submit a report showing the returns. Employees who are taken on a contract basis for a
period less than 300 days in the preceding year or those who work in managerial or
administrative posts do not qualify for deductions.
Tax Deduction under Section 80LA:

Deductions under Section 80LA can be availed by Scheduled Banks which have offshore
banking units in Special Economic Zones, entities of International Financial Services Centres
and banks which have been established outside India, in accordance to the laws of a foreign
nation. These assessees are eligible for deductions equivalent to 100% of the income for the first

employees
5 years, and 50% of income generated through such transactions for the next 5 years, subject to
the rules of the land.
Such entities should have relevant permission, either under the SEBI Act, Banking Regulation
Act or registration under any other relevant law.
Tax Deduction under Section 80P:

Section 80P caters to cooperative societies, offering tax deductions on their income, subject to
certain conditions. 100% deduction is permitted to cooperative societies which have incomes
through cottage industries, fishing, banking, sale of agricultural harvest grown by members and
milk supplied by members to milk cooperative societies.
Cooperative societies which are involved in other forms of business are eligible for deductions
ranging between Rs 50,000 and Rs 1 lakh, depending on the type of work they are involved in.
Deductions which can be claimed by all cooperative societies are listed below.
Income which a cooperative society makes by renting out warehouses.
Income derived through interest on money lent to other societies.
Income earned through interest from securities or properties.
Tax Deduction under Section 80QQB:

Section 80QQB permits tax deductions on royalty earned from sale of books. Only resident
Indian authors are eligible to claim deductions under this section, with the maximum limit set at
Rs 3 lakhs. Royalty on literary, artistic and scientific books are tax deductible, whereas royalties
from textbooks, journals, diaries, etc. do not qualify for tax benefits. In case of an author getting
royalties from abroad, the said amount should be brought into the country within a specified time
period in order to avail tax benefits.
Tax Deduction under Section 80RRB:

Section 80RRB offers tax incentives to patent holders, providing tax relief to resident individuals
who receive an income by means of royalty on their patent. Royalty to the tune of Rs 3 lakhs can
be claimed as deductions, subject to the patent being registered after 31/3/2003. Individuals who

employees
receive a royalty from foreign shores need to bring said amount to the country within a specific
time period in order to be eligible for tax deductions on such royalty.
Tax Deduction under Section 80TTA:

Deductions under Section 80TTA can be claimed by Hindu Undivided Families and Individual
taxpayers. This section permits deductions to the tune of Rs 10,000 every year on the interest
earned on money invested in bank savings accounts in the country.
Tax Deduction under Section 80U:

Tax deductions under Section 80U can be claimed only by resident individual taxpayers who
have disabilities. Individuals who have been certified by relevant medical authorities to be a
Person With Disability can claim a maximum deduction of Rs 75,000 per year. Individuals
who have severe disabilities are entitled to a maximum deduction of Rs 1.25 lakh, subject to
them meeting certain criteria. Some of the disabilities which classify for tax benefits are autism,
mental retardation, cerebral palsy, etc.
Tax saving Schemes:

An income tax is imposed on an individual by the Government of India only if his or her income
is included in the slab of taxable income. The Indian Income Tax Act of the year 1961 governs
the levy whereas C. B. D. T. (Central Board for Direct Taxes) governs the Department of Income
Tax in India. However, as per some of the sections of this Act like Section 80 C, 80 CCF, 80 D
etc., exemptions are given on certain incomes. There are many tax saving options, investing on
which, one can get a deduction on his or her total income tax.
Under Section 80C of the Indian Income-Tax Act, 1961, an individual or employee can invest
up to R1.5 lakh, which includes investments in Public Provident Fund, National Pension
Scheme,Equity.Linked.Savings.Scheme,Unit.Linked.Insurance.Plans,PPF,NPS(new.provident.sc
heme),Elss(equity.linked.savings.scheme),Ulips(Unit.linked.insurance.plans),EPF(employees.pro
vident fund ), Senior citizens saving scheme ,Life Insurance Premium, Pension Fund, Bank
Deposits Tax-saving fixed Deposit, Section 80D: Medical Insurance, Section 80CCG: Rajiv
Gandhi Equity Saving Scheme (RGESS),Infrastructure-Bonds, Voluntary Provident Fund

employees
(VPF),Pension/ Annuity Schemes, SukanyaSamriddhi Account, Post office time deposits, small
saving schemes, Here are some investment options that not only save tax, but also yield higher
returns in the long run.
After having discussed the rationale of investments for tax saving, next question which comes to
mind is what are the investment options available where one can invest and which is more
beneficial out of several options available. All of these investments are deductible under
80C.Total up everything that applies to employees, and now employees invest under 80C to meet
your Rs. 1.5 lakhs deductible limit. Now that you know this, lets see where you can put this
money.
Tax saving investment on deferent tax saving Investment policies:
1. Public Provident Fund

Commonly known as PPF his tax saving option falls within the Section 80 C of the IncomeTax
Act in India. Public Provident Fund allows a maximum contribution Of INR, 1, 50,000 per year.
The return in this scheme is compounded annually at the rate of 8, 5%. It is oneof thelong term
ventures that do not allow complete withdrawal before 15 years. Post 5yearsof investment,
withdrawal is possible though. No tax is levied on the earnedinterest. Besidesthese, it even forms
a retirement-planning tool. One can have such anaccount in eitherthe State Bank of India or some
of the nationalized banks or at some ofthe designated post office branches.

employees
Interest accrued on the certificates every year is liable to income tax but deemed to have been
reinvested. Income tax rebate is available on the amount invested and interest accruing under
section 88 of Income Tax Act, as amended from time to time. Income Tax relief is also available
on the interest earned as per limit fixed vide section 80L Income Tax, as amended from time to
time.
It is the most popular tax-saving instrument and the interest rate is linked to bond yields. The
interest rate is fixed every year on April 1 and is 25 basis points higher than the 10-year
government bond yield of the previous year. Currently, PPF gives a return of 8.7% per annum
compounded yearly.One can deposit a minimum of R500 up to R1.5 lakh in 12 installments, or
as a lump sum. The ease of opening a PPF account and its liquidity make it a perfect financial
instrument.
It suits high-risk investors and self-employed professionals who are not covered under the
Employees Provident Fund scheme. One gets tax deduction at the time of investment every year,
the income generated in the scheme is tax-exempt and even the corpus at the time of withdrawal
is tax-free. One can do part-withdrawal from the seventh financial year and a loan facility is
available from third financial year.
It offers 8.7% interest per annum. Govt. of India would keep updating this every year.
Tax free returns at maturity.
PPF has lock-in period of 15 years.
Investment up to Rs 1.5 Lakhs per annum qualifies for IT Rebate under section 80 C of
Income Tax Act.
Loan facility in PPF account is available from 3rd financial year up to a 5th financial year.
The rate of interest charged on loan shall be 2% per annum above the interest paid.
Withdrawal permitted from 6th financial year.
Non-Resident Indians (NRIs) are not eligible.
An individual cannot invest on behalf of a HUF (Hindu Undivided Family) or Association of
persons.
Minimum investment is Rs 500 and maximum is Rs 150,000
You can invest every month, by the 5th of the month and enjoy the interest for the remaining

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period of the month.

PPF offer several good features and this is one of the best investment options to save tax u/s
80C. This is suitable for those who want tax savings and who want to accumulate funds for
retirement purpose thereby earning safe and highest returns.
10 Years Social Security Certificates:

These certificates can be purchased by person in the age group of 18-45 years. The minimum
investment amount is Rs.500. The maturity period of these instruments is 10 years and the rate of
interest is compounded annually. The interest qualifies for deduction up to a maximum of
Rs.7000 under section 80-L of the Income Tax Act. These certificates can be enchased premature
after 3 years of the date of issue. In case of the death of the certificate holder before expiry of 2
years from the date of issue due to no natural causes (excepting suicide), the legal heir/nominee
are entitled to receive an amount equal to 3 times the face value of the certificates
NSC (National Saving Certificate) has all the features as a PPF has. It is risk free, yields optimal
guaranteed returns and saves tax under section 80C. But the reason NSC didn't make it to our list
is because unlike PPF, the interest received in former at maturity is taxable.
NPS new provident scheme

Tax benefit is available on investment of up to R50, 000 in a year under Section 80CCD,
which is over and above the benefit available on R1.5 lakh under Section 80C
Investments in NPS are not tax-free at the time of withdrawal though the investment and
interest accumulations are not taxed.
2. National Pension Scheme

NPS is an ideal investment tool for retirement planning. A pure defined contribution pension
product, NPS was introduced in 2004 for government employees and, in 2009; it was extended to
all private sector employees. For non-government employees, up to 50% of the contribution can
be invested in equities and the rest between corporate and government debt paper. The biggest
benefit for individual taxpayers in this years Budget came in the form of investment in NPS as
the government allowed tax benefit on investment of up to R50, 000 in a year under Section
80CCD, which is over and above the benefit available on R1.5 lakh under Section 80C.

employees
However, investments in NPS are not tax-free at the time of withdrawal though the investment
and interest accumulations are not taxed. Products like PPF and EPF, on other hand, are tax-
exempt at all the three stages investment, accumulation and withdrawal. Subscribers of NPS
Tier-1 account can now make partial withdrawal of up to 25% of contributions for certain
specified circumstances after 10 years of being in the scheme.
NPS is one of the very few investment avenues that let the investor surpass the 1.5 lakh limit of
deduction set by the section 80C. Under NPS, the percentage of the basic salary (up to a max of
10%) that your employer contributes towards your NPS is tax deductible. However, your
contribution towards NPS will still be governed by the section 80C, hence; will abide by the 1.5
lakh limit.
3. Equity Linked Savings Scheme

ELSS is a useful option for salaried investors looking at tax incentives and higher returns.
However, ELSS is a more risky proposition than PPF and needs investor prudence. With good
returns and a tax-free status, ELSS funds offer a great opportunity to be a part of an effective tax
management. Being an equity linked fund, however no guarantee of returns as they mirror the
stock markets and the financial sentiment in general. By taking the SIP route, one can stagger the
investments, which would, in turn, bring down the risk sizably. An investor can put as little as
R500 in ELSS, unlike other equity oriented funds where the minimum investment is Rs
5,000.With SIP, you can invest a fixed amount every month for up to 15 years. Money is debited
automatically from the investors account through the ECS mandate and units are allocated based
on the net asset value applicable for the day. ELSS funds score higher than other tax-savings
scheme like PPF, National Savings Certificates and five-year fixed deposits they have a lock-in
period of only three years.
ELSS is an equity-oriented mutual fund in which the returns are tax free as per Section 80C of
the Income Tax Act, 1961. The best thing about ELSS is that the lock-in period is just 3 years
and since the gains are earned through equity investments, they may be relatively higher than
Fixed Deposits and other debt-oriented saving instruments. And although it is a good short term
investment-cum-tax saving option, you must be well-aware of its past performance and be fine
with taking a moderate amount of risk while investing.

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As per the budget 2014-2015, with the increase in the investment limit in Section 80C from Rs.1
Lakh to Rs.1.5 Lakh, investors can get higher tax benefit on amounts invested ELSS up to 1.5
Lakh.
Equity Linked Saving Scheme (ELSS) is specially designed for tax saving purposes. Being
market linked product they are a high risk products but also offers the potential of high returns.
We have already counted it above among the investments that save taxes under section 80C.
There are two reasons why it makes to our list with flying marks.
It is one of the two tax saving investments that are equity based (the other one is ULIP).
It boasts of the shortest lock in period (3 years) among its class of investments.
Popularly called E. L. S. S., this is a kind of mutual fund that comes within the Income Tax
Act Section 80 C. With a minimum investment period of 3 years, this investment option
helps one get exempted from income tax payment and offers an exemption of maximum
INR. 1,50,000 in a financial year as well. The interest rate depends on the performance of
this scheme in a given year. However, if it does well, then it is more likely to increase even
the interest rate of P. P. F.
ELSS offers to youngsters the potential to earn high returns; albeit with higher risks. Lock in
period for 80C purpose is 3 years and dividends and capital gains are tax exempt. Not all
mutual funds can provide 80C deduction. Some common examples of ELSS areSBI
Magnum Tax Gain, HDFC Tax Saver, Fidelity Tax Advantage, Franklin India Index Tax
Fund, etc. If you invest for long term then, ELSS has potential to give handsome return.
Offers highest returns (not fixed and not guaranteed) compared to other tax saving options.
Lowest lock-in period of 3 years.
Investors can opt for dividend option and get regular income even during the lock-in
period.
Investing in ELSS funds through SIP every month would help you reduce burden of
investing a lump sum, take care of market fluctuations and provide higher returns.
Since this is an equity mutual fund and investment period is 3+ years, returns / capital
gains are tax free.
Some of the top ELSS tax saving mutual funds are Reliance Tax Saver fund, ICICI Pru
Tax Plan, Franklin India Tax Shield fund etc.

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4. Unit Linked Insurance Plans (ULIP)

ULIP is a market-linked insurance scheme that offers tax-saving options under Section 80C of
the Income-Tax Act. Covered by the Income Tax Act's Section 80 C, U. L. I. P. is a unique blend
of investment and insurance that gives a tax exemption of INR. 1, 50,000 per year. Here, the
premium, which is being paid by a customer, gets deducted with initial charges while the rest of
the amount is invested. Such a plan can be of the following three kinds: Aggressive ULIPs where
one can invest 80 % to 100 % in equities. The rest can be invested in debt instruments though.
Balanced ULIPs where an individual can invest 40 % to 60 % in equities Conservative ULIPs,
which allows one to invest up to 20 % in equities
Ulips offer the advantage of life cover with an investment in equity and debt markets along with
tax saving. The insurance regulator had made changes to make the products transparent and
investor-friendly. The lock-in period was raised to five years from three years, commissions paid
to agents were reduced drastically and the sum assured was raised up to 10 times the premium.
One can also opt for a debt market-linked Ulip and move to equity when the market is moving up
to attain higher returns.
ULIPS are combinations of Life Insurance and Equity Investments. All ULIPS qualify as life
insurance policy and the premiums are exempted from income tax benefit.
After 2010 IRDA guidelines, Insurance companies have reduced ULIP charges.
ULIPs provide risk coverage.
New ULIP policies have low policy / administration charges.
No guaranteed returns. It provides returns of 5% to 11% returns depending on the
scheme.
Should hold for 10-12 years to see good returns.
5. SENIOR CITIZENS SAVING SCHEME

This is also a small saving scheme by the government. It is designed for senior citizens. This
scheme gives regular income. The interest rate of senior citizen saving scheme is better than
NSC or PPF. The retired defense personnel can subscribe this scheme at any age.

employees
It provides assured returns for Senior Citizens. Principal amount is safe as they are
backed by Government.
Interest rates are at 9.2% per annum.
Interest is paid at the end of every quarter. This is one of the best investment options to
save tax for Senior Citizens as they would get quarterly interest.
The maximum investment limit is Rs 15 Lakhs.
Interest earned is taxable like any other fixed deposit scheme.
6. Life Insurance Premium

Life insurance is among the best and authentic tax saving options covered within the Section 80
C of India's Income Tax Act. Though the policy allows a maximum deduction of INR. 1,50, 000
in a given financial year, but in case anyone surrenders the plan before paying two year's
premium, then it will have reverse effect of tax benefit. However, the tax benefit for the premium
is restricted to 20 % of the initial amount of the capital invested. Apart from that, this helps one
plan for the unforeseen events in his or her life.
Life insurance plays an important role in the individuals financial portfolio offering security to
the individuals family in case of an eventuality. This makes it the breadwinners primary
responsibility to take life insurance at the earliest for the familys security.
Life insurance, be it traditional (endowment) or market-linked (ULIP), offers tax benefits to
policyholders on the premiums paid.
There are various life insurance plans like:
1. Term plans
2. Endowment plans
3. ULIPs or unit-linked plans
4. Money back plans
Regardless of its nature, life insurance plans offer tax benefits to policyholders.
Premiums paid towards life insurance are covered under Section 80C of the Income Tax Act up
to a maximum of Rs 1.5 lakhs. Proceeds on death / maturity are tax-free under Section 10(D).If
policy is surrendered/terminated within fiveyears; deductions claimed are added to income and
taxed accordingly

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All premiums paid towards life insurance policies are eligible for income tax deduction u/s 80C
I-T Act. Premiums paid for or on behalf of others like your parents/ in-laws are not eligible for
deduction.
An important aspect of an individual is to consider adequate insurance plans for earning
member.
Prefer term insurance plan as it comes with low costs and high risk coverage.
Term insurance plans come with zero maturity value. These are designed for risk
coverage and not for saving purpose.
Consider adequate insurance coverage based on 10 / 15 years expenses / income.
And also Life Insurance is a very important investment instrument which gives assured
returns on maturity and risk cover to protect your family in case of any untimely events. It is
also a tax saving investment which gives you tax benefits under section 80C for the
premium paid towards the policy. Once the policy term finishes, there are additional benefits
to be availed as well. As applicable from April 1st, 2012 under section 10(10D), if the
premium paid per year for the policy duration is less than 10% of the assured sum, then the
amount received on maturity is exempted from tax deduction. However, as stated by the
finance bill 2014 In order to have a mechanism for reporting of transactions and
collection of tax, in respect of sum paid under life insurance policies which are not
exempted under section 10(10D) of the Act, it is proposed to insert a new section in the Act
to provide for deduction of tax, at the rate of 2 per cent on sum paid under a life insurance
policy, including the sum allocated by way of bonus, which are not exempt under section
10(10D) of the Act. In other words, any sum received under a life insurance policy, which
does not satisfy conditions laid down in section 10(10D) will now be subject to withholding
tax at the rate of 2%.
As for health insurance, you can get tax benefits under section 80D of up to 15,000 INR on
policies for yourself, spouse and children. And if you are paying health insurance premium
for your parents as well, then you can get an additional deduction of 15,000 INR taking the
total benefit to 30,000 INR. These benefits however, are subject to a couple of conditions
You should be under 65 years in age.

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Policy premium must be paid through cheque or credit card and not cash. Policies whose
premium is paid through cash do not qualify for the said benefit.
Life Insurance is not a pure form of investment yet somehow owing to its dual edged
benefits, it makes it to the top of our list. It gets you a life cover that acts as a financial
cushion in case of a contingency. Moreover, under section 80C of Income Tax Act, the
premium you pay on a life insurance plan is deductible from your total income, thus
lowering your taxable fraction. The upper limit for this deduction is Rs 1 Lakh. Even the
more evolved forms of life insurance save the tax for the investor under different sections.
The premiums paid for ULIPs (Unit Linked Insurance Plans) are exempted from taxes under
section 80C.
But this is not all, under section 10(10D), the lump sum that is paid to the beneficiary in
case of an eventuality is not taxable. If it's a pension plan, the 1/3rd maturity amount paid
out as lump sum is not taxable. Though, the rest 2/3rd fraction paid out as annuity is taxable.
7. Pensionplans (fund)
Pension Plans is another form of life insurance. They serve a different end-objective from other
insurance plans like term plans and endowment plans which are called protection plans. While
protection plans are geared to financially secure the individuals family on his death, pension
plans aim at providing for the individual and his family if he lives on.
Contributions towards pension are covered under Section 80CCC (sub-section under Section
80C) of the Income Tax Act. The aggregate limit of deduction under all the sub-sections of
Section 80C cannot exceed Rs 1.5 lakhs.
Under Section 80CCC, you can invest up to Rs. 1.5 lakhs in a Pension Fund of LIC of India or
any other private insurer. Any premium paid towards any annuity plan, whether deferred or
immediate will give you tax relief in that financial year. Contribution towards pension funds is
under a Sub Section of 80CCC which is also a part of the 80C Rs. 1.5 lakhslimit. Amount that is
deposited is received back as pension on a monthly basis. In case of surrender of policy, amount

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deposited will be returned back with the interest. Amount received will be taxable for the year in
which the amount is received.
8. Bank Deposits Tax-saving fixed Deposit

Fixed Deposits (FDs) are another popular tax saving option covered by the Section 80 C of the
Income Tax Act .With a maximum exemption of INR. 1, 50,000 annually, the rate of interest
varies from one bank or post office to another. However, the tax saving can only be done of FDs
once you have invested for a minimum duration of 5 years. This scheme neither allows the
encashment of the money prior to completion of the 5 years term nor can this be used as the
security against any loan.
Investment in fixed deposits of scheduled bank with tenure of 5 year is entitled for section 80C
deduction.
This is one of the old and best investment options to save income tax under section 80C
of IT act.
Interest rates vary between 8.5% to 9.75% per annum
Interest is taxable
5 Year Lock-in period
Some of the best tax saving FD schemes offered by banks are : Bharat Co-operative Bank
9.5% per annum; Ratnakar Bank 9.5% per annum ; Lakshmi Vilas Bank 9.25% per
annum ; Andhra Bank 9.1% per annum ; Bank of India 9.05% per annum
As per the provisions under section 80C, fixed deposits with a Bank for a lock-in period
of no less than 5 years is exempted from tax. This exemption is applicable within the 1,
50,000 INR limit (as per the budget 2014-15) which also includes instruments like Life
Insurance and Provident Funds.
9. Section 80CCG: Rajiv Gandhi Equity Saving Scheme (RGESS)

Investors who have never invested into equity directly and have an annual income of up to Rs 12
lakhs can claim tax benefits under RGESS under Section 80CCG. A deduction of 50% of the
investment amount (capped at Rs 50,000) can be claimed over and above the 80 C limit only for
the first three consecutive years.

employees
RGESS offers tax benefits for first time investors who are earning up to Rs 12 Lakhs per
annum.
Maximum investment is Rs 50,000. Such amount can be invested in BSE100 stocks or
RGESS Mutual funds.
50% of such invested amount qualifies for tax benefit u/s 80C. Means if you invest Rs
50,000 in BSE 100 stocks or RGESS Mutual funds for the first time, you would get tax
exemption of Rs 25,000 for the first time and only one time. Means you can get the
maximum tax benefit of Rs 7,725 (30% tax bracket).
Returns are not guaranteed as investments are made in stocks and RGESS mutual funds.
RGESS is a little different from standard ELSS despite being equity-based. Approved by
Finance Minister P. Chidambaram on September 21, 2012, this scheme has been introduced
to encourage first time investors into adopting the equity culture. The maximum investment
allowed is 50,000 INR and 50% of that amount can be used for tax benefits under Section 80
CCG. For both ELSS and RGESS, the returns are market based with a moderate to high
amount of risk and the dividends earned are tax-free. However, unlike an ELSS where in the
lock-in period is 3 years, RGESS has a lock-in period of just 1 year. A smaller investment
amount and a lesser lock-in period definitely makes the RGESS a more appealing option if
you are investing in equity savings scheme for the first time. Click here to read more on
benefits of investing in RGESS Scheme.
The attraction of RGESS is that the deduction offered under it is applicable for money over and
above the Rs. 1.5 Lakhs limit available under Section 80C. This scheme has reported returns of
about 9.6% during the last financial year.
10. Infrastructure-Bonds
Over and above the deduction allowed by the Section 80 C, one can save income tax on a
maximum amount of INR. 20, 000, by investing in different infrastructure bonds^ Covered by
the Section 80 CCF of the Indian I. T. Act, this bond has got a lock-in period of 5 to 10 years.
The rate of interest even varies from 8 % to 8.3 %.
11. Voluntary Provident Fund (VPF)

employees
Voluntary provident fund is the contribution from employee to his provident fund
account. This is beyond the employee EPF contribution of 12%. However, there is no bound
from employer to contribute to this VPF.
The maximum amount an employee can contribute is 100% of the Basic and DA.
This would carry the same rate of interest of the employee Provident Fund (EPF). The
current EPF interest rate is 8.5% per annum.
Investment in VPF can be withdrawn only during retirement, hence it is one of the best
tax saving options to save income tax.
Maturity returns are tax free.
You can also check comparison between VPF Vs EPF Vs PPF and know the differences.
12. SukanyaSamriddhi Account

SukanyaSamridhi Account can be opened at any time from the birth of a girl child till she
attains the age of 10 years, with a minimum deposit of Rs 1000. A maximum of Rs 1.5 lakh can
be deposited during the financial year. Interest on this account is fully exempt from tax in the
year of accrual as well as in the year of receipt.
13. Health insurance

Popular as Med claim Policies, which are a form of health insurance, comes within the Section
80 D of the country's Income Tax Act Applicable even on the proprietor firms cheques, these
policies offers a maximum deduction of INR. 35,000.
This deduction is calculated in addition to any other tax saving done as per the Section 80 C .The
total amount of INR. 35,000 can be divided as follows:
INR. 15.000: Premium for policies on spouse, children or self.
INR. 15.000: Premium towards policies for dependent parents, who are no senior citizens.
INR. 15,000: Premium for dependent senior citizens.
Besides saving your income tax, these policies even help you deal with your or your family's
health related problems with ease during any emergency situation

employees
Health insurance or med claim as it is more popularly known, covers expenses incurred from an
accident/hospitalization. Med claim also covers pre and post-hospitalization expenses, subject to
the sum assured.
Health insurance offers tax benefits under Section 80D. Insurance premium up to Rs 20,000 for
senior citizens and Rs 15,000 for others is eligible for tax benefit. If the policyholder pays Rs
15,000 as premium on his own policy and Rs 20,000 for his parent, a senior citizen, he can claim
tax benefit of Rs 35,000 (Rs 15,000+20,000). Maturity value is tax free for sum received under
critical illness policies. The amount you pay to get a health cover can be claimed under Section
80 D. The limits for claiming medical insurance premium have been enhanced to Rs 25,000 and
30,000 (senior citizens) for the financial year 2015-16. So, if you are paying the premium for
your parents as well, you can claim up to Rs 50,000-55,000, based on their age.
Some of you might not agree with a health insurance plan being counted as an investment, as it
offers no perky returns like the other forms of investment. But, might we mention, the value you
get from health insurance coverage makes it much more wrathful than any other form of
investment. If you have opted for a personal accident rider with your health plan, the lump sum
paid, in case the insured suffers a disability, is not taxable.
14..NPS(New-Pension-Scheme)
The NPS New Pension Scheme or the is regulated by the Pension Funds Regulatory and
Development Authority PFRDA. Any citizen of India over the 18 60 years age bracket can
participate in it. It is extremely cost effective since fund management charges are low. The fund
managers manage the money in three separate accounts having distinct asset profiles viz. Equity
(E), Corporate bonds (C) and G Government securities (G). Investors can choose to manage their
portfolio actively (active choice) or passively (auto choice).
Contributions made to the NPS are covered under Section 80CCD of the Income Tax Act. The
aggregate limit of deduction under this section along with Sections 80C, 80CCC cannot exceed
Rs 1.5 lakhs. Given the range of options, NPS is particularly useful for individuals, with varying
risk appetites, looking to set aside money towards retirement.

employees
You can save not just through your own savings, but using what your employer has paid for.
Employer contributions to NPS up to 10% of the employee's salary qualify for an additional
deduction under Section 80 CCD (2). Rejig your salary structure and ask your employer to
include NPS in your package. An additional allowance of Rs 50,000 has been granted under the
Section 80 CCD, starting financial year 2015-16. So, don't make the mistake of counting it in the
regular 80 C basket, where you also get a deduction of Rs 1.5 lakh for NPS contributions. You
gain a tax benefit of Rs 10,000 more by investing Rs 50,000 from your pockets into NPS and
claiming this under the new section 80 CCD (1b).
"NPS offers an additional benefit, but employees think it would be difficult to execute the change
from EPF to NPS. Only when we explain the benefits to them and the fact that it isn't too
cumbersome to rejig that they are convinced to switch to NPS. We explain to them the monetary
impact of saving the Rs 25,000 additional saved would be 1 crore over a period," says Kaushik.
This is another top investment option to save tax u/s 80C who are looking to save for retirement.
NPS returns vary between 4% to 10%. In 2013, some of the funds opted in this scheme
has provided 14% returns.
Low cost investment option. The fund management charges are very low at 0.0009% of
investment value.
You can invest Rs 500 per month or Rs 6,000 per annum. There is no maximum limit for
investment in NPS.
Investors have the choice to opt for allocation of equity, bonds and gilts.
Maturity amount is taxable.
One has to do some homework before subscribing to NPS Scheme.
You can review complete details of New Pension Scheme (NPS) here.
15.Tax-saving-mutual-funds
Investments in tax-saving mutual funds, also known as equity-linked savings scheme (ELSS),
qualify for tax benefits. Tax-saving mutual funds invest in stock markets, among other assets,

employees
and are more suited for investors with medium to high risk appetite. Investments are locked in
for three years.
Investments towards tax-saving mutual funds are covered under Section 80C of the Income Tax
Act up to a maximum of Rs 1.5 lakhs. Proceeds on death / maturity are tax-free under Section
10(D).Mutual funds not only save taxes, but also generate wealth and capital gains. An Equity
Linked Savings Scheme (ELSS) has a lock in period of 3 years and offers a tax deduction up to
1.5 lakh under Section 80C. The dividends declaredunder the ELSS scheme during the
investment period are tax-free. The profits on the sale of ELSS units are treated as long-term
capital gains, and are not subject to tax.
16. National Saving Certificate (NSC)

This tax saving scheme known as N. S. C. helps one get exempted from tax by an investment of
up to INR. 1,50,000per year under the Section 80 C of the I. T. Act of India. The interest rate is
compounded half-yearly at the rate of 8 % and reinvested every year from the last year's N. S. C.
The minimum period for this investment scheme is 6 years post which, one is provided with the
entire interest along with the initial capital. The major benefit of this is that one can earn a
maximum tax saving interest of INR. 1,50,000.
National Saving Certificates (VIII Issue)

Such certificates are available in denominations of Rs.100, Rs.500, Rs.1000, Rs.5000 and Rs.
10000. The interest on it is compounded half-yearly. The term of deposit is 6 years and
premature encashment is not generally possible. The amount invested in this scheme qualifies
from tax rebate of 20% up to a maximum of Rs.50, 000. The interest accrued is exempt from tax
up to Rs.7000 under sec. 88 and is paid back at the time of maturity. The National Saving
certificates can be purchased from the Post Office can be pledged as security for loan and
provide nomination facility.
Twelve Years National Saving Annuity Certificates:

This scheme provides a retirement plan. The rate of interest is the same as in NSCI Issue, though
the manner of payment of interest is different. The annuity certificates are available only in
higher denominations of Rs.3200 and Rs.6400. The deposits amount can be made either in lump

employees
sum or in periodic installments spread over a period of two years. From the 61st month onwards,
the depositor starts receiving a monthly annuity (Rs. 50 for certificates of Rs.3200 and Rs. 100
for certificates of Rs.6400) for seven Years at the end of which the holder gets Rs.4320 and
Rs.8640 respectively. In case of any default in payment of installment, either the period is
extended by one year, till the installment have been paid, or the defaulter installment are paid in a
lump sum along with simple interest at a fixed percent per annum. The amount deposited is also
refunded, if required during the Period of deferment with simple interest. The payments received
in respect of these certificates are liable to income tax.
NSC is a good medium term investment option. NSC can also be pledged as security against a
loan to banks. NSC VIII Issue has maturity period is five years, while NSC IX Issue has tenure
of 10 years. Trust and HUF cannot invest
National Saving Certificate is issued by Post offices and principal along with interest is
backed up by the Govt. of India. Hence, these are safe investment options.
NSCs are available for 5 and 10 year period
NSCs are available for a minimum investment of Rs 500 and in multiples of Rs 1,000 /
Rs 5,000 / Rs 10,000
There is no maximum limit for investment.
Interest rates are 8.5% for the 5 year NSC (VIII) and 8.8% p.a. for 10 years NSC (IX)
Rs 100 invested in 5 year NSC would fetch Rs 151.62 and in 10 years would fetch Rs
234.35
Interest is compounded every half year.
Interest received is taxable. You need to show this as other income while filing ITR and
pay income tax. However, such interest can be claimed again as exemption u/s 80C (within
the limit of Rs 1.5 Lakhs). Means you would show as other income and exemption u/s 80C
and need not pay any tax on such interest.
Individuals, Joint and minor, supported by Guardian can invest NSC.
National Savings Certificates are also tax free deposits allowing you to save up to Rs.1.5 lakhs
under Section 80C of the Income Tax Act. Any deposits made under NSC, however, are not tax
free as understood wrongly by many investors. But the interest earned can be re-invested to save
tax under the same section.

employees
NSC investments can be made at your nearest post office. NSC investments come with options
of a lock-in period for 5 years and 10 years. The rate of interest for investments made under NSC
is fixed at 8.50% for five years and 8.8% for ten years. The minimum investment here can be as
low as Rs.100.
17.Employee Provident Fund

E. P. F., this scheme offers a total yearly exemption of INR.1,50,000as mentioned inthe Income
Tax Act Section 80 C. In this fund, 10% to 12% of aperson's basic salary gets deducted and the
other 12 % is contributed by the employer. One can withdraw the entire amount in instances of
leaving job, retirement after 58 years of age or taking V. R. S. Partial withdrawal can be done for
home, medical or marriage related expenses though.
18. TuitionFee
Covered under the Indian 1 T. Act Section 80 C, payment made towards the education of
children is even exempted from one's yearly income tax. Being a part of Section 80 C, one can
get a maximum exemption of up to INR. 100, 000 per financial year. Tuition fee for school,
college and university as well as coaching fee for varied competitive exams are considered under
this policy. However, just 2 children are considered for such a kind of tax exemption.
19. Post Office Tax Saving Schemes

Under the Section 80 C of the I. T. Act of the nation, one can invest in any of the different tax
saving options provided by the post offices. Though, along with the terms and conditions, the
interest rate as well as the tenure of the investment varies from one scheme to another, they
provide a maximum deduction of INR. 1, 50,000 to name a few of such schemes offered by India
Post are:
A) 10 Years Social Security Certificates
These certificates can be purchased by person in the age group of 18-45 years. The minimum
investment amount is Rs.500. The maturity period of these instruments is 10 years and the rate of
interest is compounded annually. The interest qualifies for deduction up to a maximum of
Rs.7000 under section 80-L of the Income Tax Act. These certificates can be enchased premature
after 3 years of the date of issue. In case of the death of the certificate holder before expiry of 2

employees
years from the date of issue due to no natural causes (excepting suicide), the legal heir/nominee
are entitled to receive an amount equal to 3 times the face value of the certificates.
B) National Saving Certificates (VIII Issue)

Such certificates are available in denominations of Rs.100, Rs.500, Rs.1000, Rs.5000 and Rs.
10000. The interest on it is compounded half-yearly. The term of deposit is 6 years and
premature encashment is not generally possible. The amount invested in this scheme qualifies
from tax rebate of 20% up to a maximum of Rs.50, 000. The interest accrued is exempt from tax
up to Rs.7000 under sec. 88 and is paid back at the time of maturity. The National Saving
certificates can be purchased from the Post Office can be pledged as security for loan and
provide nomination facility.
C) Deposits Scheme for retiring Govt Employee -1988

This scheme permits only one account, which can be opened by retired Central/State Govt,
employee in own name or jointly with the spouse. The account can be opened within three
months from the date of receiving the retirement benefits with a minimum of Rs.1000/- and in
multiple thereof can be withdrawn after the expiry of 3 years from the date of deposits. Only one
withdrawal in multiples of Rs. 1000/-can be made in a calendar year. Premature encashment can
be made after one year from the date of deposit but before the expiry of 3 years in which case the
interest on the amount so withdrawn will be payable from the date of deposit up to the date of
withdrawal. The excess interest paid will be adjusted at the time of such withdrawal.
D) KisanVikas Patra
KisanVikasPatra (KVP) is a saving instrument that provides interest income similar to bonds.
Amount invested in KisanVikasPatra doubles on maturity after 8 years and 7 months.
KisanVikasPatra can be purchased by the followings:
An adult in his/ her own name, on behalf of a minor
A minor

employees
A trust
Two adults jointly
KisanVikasPatraare available in the denominations of Rs.100, Rs.500, Rs. 1000, Rs.5000 and Rs.
10, 000 and Rs.50, 000. There is no maximum limit on purchase of KVPs. Premature
encashment of the certificate is not permissible except at a discount in the case of death of the
holder(s) forfeiture by a pledge and when ordered by a court of law. No income tax benefit is
available under the KisanVikasPatra scheme. However, the deposits are exempt from tax
deduction at source (TDS) at the time of withdrawal.
E) IndiraVikas. Patra
These instruments are available at post office and can be purchased by any person. Minimum
investment in Indira VikasPatra is Rs.100 and there is no maximum limit. These are available in
the maturity denomination of Rs.200, Rs.500, Rs.1000 and Rs.5000 and the investor has to pay
half the face value. The initial amount is doubled in 5 years and these Patras cannot be enchased
premature. The interest of Indira VikasPatra is compounded annually, is payable on maturity only
and is taxable. These instruments are like bearer-bonds and hence have to be carefully preserved.
20. Housing Loan

Out of this list, we would like to mention one more financial instrument here - Loans. Yes, we
know loan is not a form of investment but it is a very efficient tax saving instrument. Here's how,
as per section 80E of the Income Tax act, the interest component of the repayment on the higher
education loan is tax deductible. Under section 80C, the monthly Home Loan EMI made towards
the principal component of the loan is exempted from taxation and most importantly under
Section 24; the interest on the home loan is also exempted from tax. Seeing such unique benefits,
it seems loans deserve to be in the league of best tax-saving investments.
21. Tax Free Bonds

These bonds are debt securities issued by public sector entities and they can be looked at as a
profitable long term savings option, as the interest earned on these bonds is non-taxable. In

employees
addition, bonds that have AA and AAA credit ratings are very likely to meet their financial
commitments. However, one must understand that returns on these bonds are beneficial only
after completing the lock-in period because the returns are guaranteed at maturity. However, if
you decide to sell these bonds before the lock-in period ends, then you may get an amount higher
or lower than the initial investment made.
In 13 public sector institutions were allowed to raise Rs.48, 000 crore through tax-free bond, in
2013-14. However there was no announcement on new tax-free bond issuances in the Union
Budget 2014-15. However, with the possibility of a future rate cut, these bonds stand to offer
higher rates. Thus the absence of an announcement is seen as a positive outcome for existing
bonds.
CHAPTER -4
DATA ANALYSIS AND INTERPRITATION
QT3.CLASSIFICATION BASED ON AGE

employees
TABLE -1
Serial No Age Group No Of Respondents Percentage
1 Below 20 years 0 0%
2 20-30 years 17 34%
3 30-40 years 21 42%
4 Above 40 years 12 24%
Total 50 100
Data analysis-
The above table shows that42% of therespondents belong to the age group of 30-40 years. 34%
belong to the age group of 20-30 years and 24% belongs to above 40 years of age and none of
the respondents are aged below 20 years.
Interpretation:It is found in the table that majority of the respondents belong to the age group of
30 to 40 years as that age group earns more taxable income as compared to other age groups.
QT
4.CLASSIFICATION BASED ON OCCUPATION
TABLE 2
Serial No Type Of No Of Percentage

employees
Occupation Respondents
1 Business 0 0%
2 Professional 0 0%
3 Govt. Employees 50 100%
4 Others 0 0%
Total 50 100
Data analysis:
From the above table and chart it can be seen that 100% of the total number of respondents are in
govt. employees. None of the remaining respondents are business, professional and others.
Interpretation: It is interpreted that govt. employees more conscious about

tax saving schemes.
QT 5. CLASSIFICATION BASED ON TAXABLE INCOME

employees
TABLE-3
Serial No Type Of income No Of Percentage

Respondents
1 salary 50 100%
2 House property 0 0%
3 Business & 0 0%
profession
4 Others source 0 0%
Total 50 100
Data analysis:
The above table shows that100% of income generated by respondent from salary head. None of
the respondents income generated from house property, business or profession and other
sources.
Interpretation:It is interpreted that the govt. employees major source of income is generated
from the head of salary.
QT 6. CLASSIFICATION BASED ON ANNUAL INCOME
TABLE - 4

employees
Serial No Annual Income No Of Percentage

Respondents
1 < than 3 lakhs 7 14%
2 3 lakhs 5 lakhs 23 46%
3 5 lakhs 10 lakhs 18 36%
4 > than 10 lakhs 2 4%
Total 50 100
Data analysis:
The above table shows that46% of respondent are in the income range of 3 5 lakhs. 36% of
respondents are in the range of 5 10 lakhs. And 14% of respondents are in below 3 lakhs range.
Remaining 4% of respondents are in the range of more than 10 lakhs.
Interpretation:It is interpreted that majority of respondent govt. employees is in the income
range 3 lakhs 5 lakhs.
QT 7. CLASSIFICATION BASED ON TAX SLAB RATE

employees
TABLE-5
Serial No Tax slab Rate No Of Percentage

Respondents
1 10% 8 16%
2 20% 34 68%
3 30% 4 8%
4 None 4 8%
Total 50 100
Data analysis:
The above table shows that68% of respondents in the 20% tax slab rate. 16% of respondents are
in the 10% slab rate and 8% respondents are in 30% slab rate. Remaining 8 % of the respondents
do not have taxable income.
Interpretation:It is interpreted that majority of respondents fall under the tax slab of 20%.
QT 8. CLASSIFICATION BASED ON GETTING INFORMATION ON TAX SAVING

employees
TABLE - 6
Serial No Get Info about tax saving No Of Percentage

through Respondents
1 consultant 19 38%
2 Friends & relatives 20 40%
3 Media 11 22%
4 Other 0 0%
Total 50 100
Data analysis:
The above table shows that 40% of respondents get info on tax saving schemes through friends
and relatives. 38% from tax consultant and remaining 22% respondents get info through Medias.
None of respondents are dependent others.
Interpretation: It is interpreted those majorities Respondents are prefer to get information on
tax saving schemes through the friends and relatives.

employees
QT 9. CLASSIFICATION BASED ON INCOME TAX EXAMPTED UNDER SEC 80C
TO 80U
TABLE - 7
Serial No Income tax No Of Respondents Percentage

exempted
1 yes 37 74%
2 No 13 26%
Total 50 100
Data analysis:
The above table shows that 74 % respondents are getting exemption u/s 80C to 80U .and
remaining 26 % respondents are not getting tax exemption u/s 80C to 80U.
Interpretation:It is interpreted that majority of the respondents avail the benefit of tax deduction
under the head 80C to 80U.

employees
QT 10. CLASSIFICATION BASED ON TAX SAVING INVESTED PLANS
TABLE - 8
Serial No Tax saving invested No Of Respondents Percentage

plans
1 Yes 48 96%
2 No 2 4%
Total 50 100
Data analysis:
The above table shows that 96% of respondents are having the tax saving investment plans.
Remaining 4% of respondents is not having any investment plans for tax saving.
Interpretation: It is interpreted that majority of respondents having tax saving plans to reduce
their tax burden.

employees
QT 11. CLASSIFICATION BASED ON INCOME EXEMPT FORM TAX
TABLE - 9
Serial No Income exempt No Of Respondents Percentage

from tax
1 Yes 50 100%
2 No 0 0%
Total 50 100
Data analysis:
The above table shows that 100% of respondents are know the various types of income exempted
from tax. None of respondents are dont know about various tax exempt incomes.

employees
Interpretation: It is interpreted that all the respondents are well aware about the various tax
examtable and deductable items.
QT12. CLASSIFICATION BASED ON AWARENESS ABOUT TAX SAVING

SCHEMES
TABLE - 10
Serial No Aware on tax saving No Of Respondents Percentage

scheme
1 Yes 50 100%
2 No 0 0%
Total 50 100

employees
Data analysis:
The above table shows that 100% of respondents are aware about the tax saving schemes. None
of respondents are dont aware about the tax saving schemes.
Interpretation: It is interpreted that majority of respondents are aware about the tax saving
schemes it shows that majority of govt. employees are well known about the tax saving schemes
QT 13. CLASSIFICATION BASED ON AWARE ON SCHEMES OF TAX SAVING
TABLE - 11
Serial No Tax saving schemes No Of Percentage

Respondents
1 Public Provident Fund 4 8%
2 National Pension Scheme 4 8%
3 Equity Linked Savings Scheme 4 8%

employees
4 Unit Linked Insurance Plans 9 18%
5 Senior citizens saving scheme 8 16%
6 Life Insurance Premium 11 22%
7 Pension plans 4 8%
8 Bank fixed Deposits 6 12%
9 Other 0 0%
Total 50 100
Data analysis:
The above table shows that 22% of respondents are aware about the life
insurance plan. 18% of respondents are aware about unit linked insurance
plans and 16% of respondents are aware about senior citizens saving
schemes. 8% are aware about public provident fund. 8% are national pension
scheme and 8 % are aware about the equity linked saving schemes
remaining 8% are aware about pension plan.
Interpretation: It is interpreted that majority of respondents are aware about

the life insurance plans because of every govt. employees and individuals
taken the life insurance for their future benefits and uncertainty.

employees
QT 14. CLASSIFICATION BASED ON INVESTED IN TAX SAVING SCHEMES
TABLE -12
Serial No Tax saving schemes No Of Percentage

Respondents
1 Public Provident Fund 8 16%
2 National Pension Scheme 6 12%
3 Equity Linked Savings Scheme 7 14%
4 Unit Linked Insurance Plans 6 12%
5 Senior citizens saving scheme 3 6%
6 Life Insurance Premium 10 20%
7 Pension plans 4 8%
8 Bank fixed Deposits 6 12%

employees
9 Other 0 0%
Total 50 100
Data analysis:
The above table shows that 20% of respondents are invested in the life insurance plans. 16% of
respondents are invested in the public provident fund and 14% of respondents are invested in the
Equity Linked Savings Scheme. 12% of respondents are invested in National Pension Scheme.
12% of respondents are invested in Unit Linked Insurance Plans and 12% are invested in Bank
fixed Deposits. 8% of respondents are invested in Pension plans. Remaining 6% of respondents
are investing in Senior citizens saving scheme.
Interpretation: It is interpreted that majority of respondents are invested in

life insurance plans because of every govt. employees and individuals taken
the life insurance for their future benefits and uncertainty of their life.

employees
QT 15. CLASSIFICATION BASED ON NUMBER OF TAX SAVING SCHEMES ARE

INVESTED
TABLE - 13
Serial No No of tax saving schemes No Of Percentage

Respondents
1 Zero 2 4%
2 One 8 16%
3 Two 16 32%
4 Three 14 28%
5 Four 9 18%
6 More than four 1 2%
Total 50 100%
Data analysis:
The above table shows that 32% of respondents are taken two tax saving schemes. 28% of
respondents are taken three schemes and 18% of respondents are taken four tax saving schemes.
16% of respondents are taken one scheme and 4% of respondents are taken zero schemes.
Remaining 2% of respondents are taken more than four schemes.
Interpretation: It is interpreted that majority of respondents taken two tax saving scheme for
investment to avoiding the tax on their income.

employees
QT 16. CLASSIFICATION BASED ON REASONS FOR INVESTED IN TAX SAVING

SCHEMES
TABLE - 14
Serial No Reasons of investment No Of Percentage

Respondents
1 Reduce tax burden 12 24%
2 Assured Returns 16 32%
3 Less Risky 21 42%
4 Others 1 2%
Total 50 100
Data analysis:
The above table shows that 42% of respondents are taken tax saving scheme for the reason of
less risky. 32% of respondents are taken the scheme for assured returns. 24% respondents taken
the scheme for reduce the tax burden. Remaining 2% of respondents are taken the tax saving
scheme for some other reasons.
Interpretation: It is interpreted that majority of respondents invested in the tax saving scheme
for main reason for assured returns from the schemes.

employees
QT 17. CLASSIFICATION BASED ON NATURE OF TAX SAVING SCHEMES
TABLE - 15
Serial No Nature of tax saving schemes No Of Percentage

Respondents
1 Exempted at the time of 10 20%

investment and maturity.

investment only.
3 Exempted at the time of maturity 14 28%

only.

investment and regular income.
5 Exempted regular income and at 4 4%

the maturity.
6 Dont Bother. 3 6%
Total 50 100

employees
Data analysis:
The above table shows that 28% of respondents prefer to invest in the nature of exempted at the
time of maturity only.22% of respondents prefers to invest on exempted at the time of investment
and regular income. And 20% respondents are preferred for Exempted at the time of investment
and maturity. 16% of respondent prefer to invest in Exempted at the time of investment only. 6%
of respondents dont bother about scheme nature. Remaining 4% of respondent prefer to
Exempted regular income and at the maturity.
Interpretation: It is interpreted that majority of investor prefer to the nature of Exemption at the
time of maturity only while future is uncertain, They need benefit for their investment after
maturity period.
QT 18. CLASSIFICATION BASED ON PREFER TO INVESTED THEIR MONEY INTO

TAX SAVING SCHEMES

employees
TABLE -16
Serial No Amount prefer to invested in tax No Of Percentage

saving schemes Respondents
1 < than 25000 2 4%
2 25000 - 50000 7 14%
3 50000 75000 10 20%
4 75000 - 100000 12 24%
5 > than 100000 19 38%
6 Not interested 0 0%
Total 50 100
Data analysis:
The above table shows that 38% of respondents are prefer invest more than 100000 lakhs money
in to tax saving schemes.24% of respondents prefer to invest 75000 100000 amount in to tax
saving schemes. 20% of respondents are prefer to invest 50000 75000 amount in to the scheme
and 14% are prefer to invest 25000 50000 money. Remaining 2% of respondents are preferred
to invest less than 25000 amounts in tax saving schemes.
Interpretation: It is interpreted that majority of respondents are preferred to invest more than
100000 amount on the tax saving schemes for the reason of reduce the tax burden and less risky
compare to other investments.

employees
QT 19. CLASSIFICATION BASED ON DRAWBACKS OF TAX SAVING SCHEMES

FIND BY USER
TABLE - 17
Serial No Drawbacks of tax saving No Of Percentage

schemes Respondents
1 Less Returns 17 34%
2 Lack of Awareness 12 24%

employees
3 Slow Updating 20 40%
4 Others 1 2%
Total 50 100
Data analysis:
The above table shows that 40% of respondents are find the drawback for Slow Updating.34%
respondents find that Less Returns .24% respondents find the drawback of Lack of Awareness .
Remaining 2% of respondents find the drawback in other.
Interpretation: It is interpreted those majorities of respondents are find main drawback in the
tax saving schemes is Slow Updating.
QT 20. CLASSIFICATION BASED ON PREFER TO ADDRESS CONCERN ABOUT

TAX SAVING SCHEMES
TABLE - 18
Serial No Concern about tax saving No Of Percentage

schemes Respondents
1 Increased Awareness 15 30%

employees
2 New Updated Schemes 14 28%
3 Mark to Market Returns 21 42%
4 Others 0 0%
Total 50 100
Data analysis:
The above table shows that 42% of respondents prefer to address concern about tax saving
schemes for Mark to Market Returns.30% of respondents prefer on Increased Awareness.
Remaining 28% of respondent prefer to address on concern of New Updated Schemes.
Interpretation: It is interpreted those majorities of respondents prefer to address concern on
Mark to Market Returns because of marketability very important for investment.
QT 21. CLASSIFICATION BASED ON TERM OF INTRESTED TO INVEST
TABLE - 19

employees
Serial No Terms No Of Respondents Percentage
1 Long Term 31 62%
2 Short Term 19 38%
Total 50 100
Data analysis:
The above table shows that 62% of respondents are interested to invest in long term investments.
Remaining 38% of respondents are interested to invest in short term investments.
Interpretation: It is interpreted that majority of respondents are interested to invest their money
in to long term tax saving investment schemes because of long term investment gives more
return than short term investments.
QT 22. CLASSIFICATION BASED ON DURATION OF PREFER TO INVEST ON TAX

SAVING SCHEMES

employees
TABLE - 20
Serial No Duration of investment No Of Percentage

Respondents
1 1 year 3 6%
2 1 year 3 years 17 34%
3 3 years 10 years 14 28%
4 More than 10 years 16 32%
Total 50 100
Data analysis:
The above table shows that 34% of respondents prefer to invest in tax saving scheme for 1 year
3 years. 32% of respondents are prefer invest More than 10 years .28% of respondents are
prefer for 3 years 10 years . Remaining 6% of respondents are preferred to one year.
Interpretation: It is interpreted that majority respondents are prefer for 1 year 3 years for
investing their money in to tax saving schemes because of investor can get assured return less
period and also this period can come in both short term and long term.
Chapter -5

employees
Finding, suggestions, and conclusion

Finding of the study:
In this study tells that majority of government employees in the middle age group.
The government employees major source of income generated from the head of salary
income.
Majority of the respondents fall under middle income group.
More number of respondents is in the 20% tax slab.
Majority of government employees are get information about tax saving through friends
and relatives.
Large numbers of government employees are getting tax exemption under section 80C to
80U.
Many of the respondents are having plan towards the tax saving.
All respondents are getting tax exemption for their income earning.
All most all government employees are aware about the tax saving schemes.
Majority of respondents are aware about life insurance plans.
And also majority of govt. employees are invested in life insurance scheme.
Majority of respondents are taken the two tax saving schemes.
More govt. employees are invested on tax saving scheme main reason for assured returns.
Majority of govt. employees are expected that tax exemption at the time of maturity.
Large numbers of govt. employees are prefer to invest more amounts on tax saving
schemes.
Main drawback of tax saving scheme is Slow Updating.
More respondents prefer to address concern about tax saving scheme is to Mark to
Market Returns.
Majority of govt. employees prefer invest in long term.
Large number of govt. employees interest in less duration of investment.
Suggestions of the Study:
Tax saving scheme are provide attracting schemes for the young and old employees.
The schemes are more concentrate towards lower and higher income group employees.
Give a guide line for tax consultant and Medias to provide more information towards tax
saving schemes.
Create more awareness on tax saving schemes and its advantages.

employees
To provide the well teaching for govt. employees towards all tax saving schemes.
To encourage the govt. employees to invest in more and more tax saving schemes.
To solve all the drawbacks of tax saving schemes.
Conclusion:
The income tax is imposed on an individual by the Government of India only if his or her income
is included in the slab of taxable income. The Indian Income Tax Act of the year 1961 governs
the levy whereas C. B. D. T. (Central Board for Direct Taxes) governs the Department of Income
Tax in India. However, as per some of the sections of this Act like Section 80 C, 80 CCF, 80 D
etc., exemptions are given on certain incomes. There are many tax saving options, investing on
which, one can get a deduction on his or her total income tax.
This study aims to figure out the impact of tax saving schemes towards government employees
and how they aware about tax savings. How much tax saving schemes is impact on the govt.

employees
employees income generation and also reduce their tax burden. Tax saving schemes is providing
the assured return and less risky on investment and these schemes are the major tool for reduce
the tax payment and increase the individuals income.

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Taxation policies and its effect on investment practices of the

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aving.Scheme(RGESS),InfrastructureBonds, VoluntaryProvident Fund (VPF),Pension/ Annuity

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Need for the study:

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To understand in depth about different investment avenues available in India.

Source of data collection:

Tools and technique use:

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Income Slabs Tax Rates

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Income Tax: TaxCalculator: AY 2017-18

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What is Tax Deduction?

Tax Deductions under Section 80C:

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Subsections under Section 80C:

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Tax Deductions under Section 80E:

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Subsections of Section 80E:

Tax Deductions under Section 80G:

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Subsections of Section 80G:

Tax Deductions under Section 80 IA:

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Tax Deductions under Section 80J:

Tax Deduction under Section 80LA:

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Tax Deduction under Section 80P:

Tax Deduction under Section 80QQB:

Tax Deduction under Section 80RRB:

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Tax Deduction under Section 80TTA:

Tax Deduction under Section 80U:

Tax saving Schemes:

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Tax saving investment on deferent tax saving Investment policies:

1. Public Provident Fund

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period of the month.

10 Years Social Security Certificates:

NPS new provident scheme

2. National Pension Scheme

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3. Equity Linked Savings Scheme

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4. Unit Linked Insurance Plans (ULIP)

5. SENIOR CITIZENS SAVING SCHEME

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6. Life Insurance Premium

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8. Bank Deposits Tax-saving fixed Deposit

9. Section 80CCG: Rajiv Gandhi Equity Saving Scheme (RGESS)

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