However it becomes taxable when you leave service at an EPF registered company. Tax on Returns: EPF interest rate is tax free.
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Employer’s contribution is also tax free but it is not eligible for deduction under Section 80C. However you have to declare PPF returns in your income tax return each year.Ĥ) Employees’ Provident Fund (EPF): Employees’ contribution to the EPF account is eligible for deduction under Section 80C. Tax on Returns: PPF returns are exempt from tax. You can invest in it through most banks and post offices. Tax on Returns: ELSS returns above Rs 1 lakh are subject to long term capital gains tax at a rate of 10%.ģ) Public Provident Fund (PPF): This is a government savings scheme with a government-administered interest rate. ELSS mutual funds have a lock-in of 3 years and invest 80% of their corpus in equities (stocks). Tax on Returns: The returns on life insurance policies, where the insurance cover is at least 10 times the annual premium, are exempt from tax under Section 10(10)(D) of the Income Tax Act.Ģ) Investment in ELSS mutual funds. Unit Linked Life Insurance Policies (ULIPs) are also eligible for deduction under Section 80C. Failure to do so will lead to reversal of deduction under this Section. If it is a multiple premium policy, you must pay at least two years’ premiums. However the insurance policy cannot be terminated within two years of commencement if it is a single premium policy. The following deductions are available under this section:ġ) Life Insurance Premiums either for yourself or family members. Companies, Limited Liability Partnerships and other bodies cannot claim this deduction.
The deduction under this category is available under Sections 80C, 80CCC and 80CCD. Deduction under Section 80C, 80CCC and 80CCD For example, if your gross total income is Rs 10 lakh and you have claimed a deduction of Rs 1.5 lakh under Section 80C, your taxable income becomes Rs 8.5 lakh. The amount you claim under this section is reduced from your gross total income for the purposes of computing income tax.
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