I am in 65-70 age group and save fully under section 80C. I am liable for a tax of Rs 13,000 at 10 per cent in 2013-14. I have already put Rs 1 lakh in a 5-year tax-saving term-deposit. Are mutual funds better than tax-free bonds to minimise this tax-liability?
-N Narasimha Moorthy
You invested Rs 1 lakh in a 5-year tax saving term deposit that gives tax benefits under section 80C. Even if you invest in tax saving mutual fund schemes, you cannot claim deduction under section 80C because you have already exhausted maximum limit under the section.
The principal invested in tax-free bonds does not any get tax deduction. Only the returns (interest) are tax free. Hence you cannot use these bonds for tax savings purposes.
Apart from tax deduction under section 80C, other tax saving avenues for an individual/ HUF are:
Section 80D- HUF can buy medical insurance for its members and claim deduction upto Rs 15,000 or Rs 20,000 if the member is a senior citizen.
Section 80DD- HUF can sponsor medical treatment for disabled member if any and claim a deduction of upto Rs 50,000 or Rs 1 lakh if disability is severe over 80 percent.Section 80DDB- expenses on curing specified diseases. HUF can claim upto Rs 40,000 or Rs 60,000 for senior citizens.