Union Budget 2020: Finance Minister Nirmala Sitharaman will present her second budget today. Amidst a host of expectations from the budget this year, taxpayers are also anticipating a rearrangement of the tax slabs. The government might announce a reduction in income tax slabs for high income individuals in an attempt to boost consumption and further simplify the tax brackets. The finance ministry might also alter the income tax slabs for individuals earning between Rs 2.5 lakh and Rs 10 lakh at 10 per cent.
However, if you are bracing up for the impact a change in tax slabs, here's where you can invest to save tax:
Public Provident Fund: Public Provident Fund or PPF contributions are eligible for tax deduction under Section 80C. Not only does it help individuals to save money, PPF scheme also offers one of the most attractive rates of interest.
FULL COVERAGE:Union Budget 2020
National Pension Scheme: National Pension Scheme or NPS' contribution as part of the mandatory retirement savings is also eligible for deduction under Section 80C. Up to Rs 50,000 put in NPS is eligible for deduction. This is over and above the deduction claim of Rs 1.5 lakh per annum allowed under Section 80C.
House loan or house rent: According to the Income Tax Act, individuals can claim tax deductions on paid home loan principal of up to Rs 1.5 lakh under Section 80C. However, the house property must not have been sold within 5 years of possession to claim this benefit.
Alternatively, if the taxpayer is earning a salary and renting a house, then he or she can claim the House Rent Allowance. Taxes are lowered partially due to HRA.
Insurance and pension plans: Premiums on existing life insurance policies and pension plans are deductible.
Medical plans: Premiums on medical claims of up to Rs 25,000 are eligible for deduction. Individuals can claim deduction for self, dependent children and spouse.