Home / Money / Personal Finance /  How to maximise my income tax savings?

I earn around 10 lakh per annum. I am 26 year old and am paying LIC premium of 28,000 per annum. I am also contributing 50,000 towards my PPF account. I still have to pay tax. Could you please suggest some tax saving options. I want to maximise my tax savings.

-Haresh Jain

By Balwant Jain, tax and investment expert

It seems you are not fully exhausting the limit of 1.50 lakh under Section 80C. I would suggest you to start an SIP of 6,000 per month towards Axis Long Term Equity Fund, an ELSS scheme , for claiming tax benefits. For shortfall in the current year, you can invest the shortfall amount in three monthly installments starting from current month in the scheme suggested above.

For saving further tax you can consider putting up to 50,000 every year in an NPS account to claim an exclusive deduction under Section 80 CCD(1B). This will take your deduction to 2 lakh. It seems you do not have any health insurance which in my opinion is a must even when your employer provides you one. For your own health insurance you can pay and claim premium up to 25,000 for buying health insurance in a year. You can also pay the health insurance premium of your parents and claim deduction up to 25,000. In case your parents are senior citizen the deduction available is 50,000. In case your parents do not have health insurance policy or are not able to get one, you can claim deduction up to 50,000 for their regular medication expenses including expenses incurred for regular check up, day today medication and hospitalization under Section 80D. Within both the limits for your family and your parents, you can separately claim up to 5,000 spent on preventive health check up every year.

You can also save tax in case you borrow money to buy or construct a house but buying a house just for saving tax is not advisable unless you really need to buy one.

(Views as expressed by the expert.)

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