Top 10 Tax saving options:

1. Avail the benefit of basic exemption limit of Rs. 2,00,000 (Rs. 2,50,000 for resident senior citizens and

Rs. 5,00,000 for resident very senior citizens 80 years or above). Make maximum of your family

members as assesses, thus to avail the basic exemption (as aforesaid) in hands of various family

members.

2. Creating senior citizens/very senior citizens (parents) assesses will be more advantageous due to the

higher exemption limit.

3. Avail rebate u/s 87A, if taxable income is upto Rs. 5 lakhs. The rebate allowable is equal to the amount

of tax or Rupees Two Thousand whichever less.

4. Invest your money in notified government schemes and securities, income from which totally exempt

from income tax u/s 10(11) and 10(15) such as:

a. Interest credited to the public provident fund accounts and withdrawals from the fund are fully

exempt from tax u/s 10(11). The present rate of interest is 8.7% per annum.

b. Post office savings bank account carrying interest @ 4% per annum credited annually exempt u/s

10(15)(i) up to Rs. 3500 in case of individual accounts and up to Rs. 7000 in case of joint accounts.

5. Invest in shares of companies and units of Mutual Funds/UTI. Incomes from these is fully exempt u/s

10(34)/(35).

6. Invest in long term saving schemes specified u/s 80C, 80CCC and 80CCD and avail deduction from

Income up to Rupees One Lakh.

7. Buy a medical Insurance policy. Considering rising costs of medical treatments, investing in a medical

insurance policy now days is a necessity, even though it has no direct return unlike other investments.

The premium is deductible u/s 80D upto a maximum of Rs. 15,000 (Rs. 20,000 if person insured is 60

years or more).

8. Buying a medical insurance policy for parents makes double sense. One because the senior citizens

generally require more medical attendance in the advancing age. Second because in respect of

premium paid on a medical policy for parents, an additional deduction is available u/s 80D upto a

maximum of Rs. 15,000 (Rs. 20,000 if any parent is 60 years or more). Further, the parents need not

be dependent.

9. Avail deduction u/s 80TTA for interest from saving accounts (in bank/post office) up to a maximum of

Rs. 10,000. Now funds parked ideally in saving accounts will earn tax free return.

10. Avail deduction u/s 80CCG by investing in listed equity shares under Rajiv Gandhi equity saving

scheme. Deduction is available at 50% of amount invested subject to a maximum deduction of Rs.

25,000. The deduction is available for three assessment years only subject to specified conditions