According to Union Budget 2010-11, a few changes have been made in Income Tax Saving Schemes structure. Here is a glimpse to new additions in tax saving methods :

• The relaxation limit under section 80C has been inceased to Rs. 2 lakhs.
• The presumptive tax limit has also been raised to Rs 60 lacs.
• Announcement of a deduction of Rs 20000 on investment in infra bonds

In India, the middle class feels the heat of Income Tax more than anyone else. However the intensified tax system poses great stress on the earner's thinking to manipulate different ways to save tax. Here is a list of certain steps which can help you save your income and minimize your Income Tax.

Section 80C of the Income Tax Act allows certain investments and expenditure to be tax-exempt. The total limit under this section is

Applicable If	Contribution to Provident Fund or Public Provident Fund Payment of life insurance premium Investment in pension Plans Investment in Equity Linked Savings schemes (ELSS) of mutual funds Investment in specified government infrastructure bonds Investment in National Savings Certificates (interest of past NSCs is reinvested every year and can be added to the Section 80 limit) Payments towards principal repayment of housing loans.Also any registration fee or stamp duty paid. Payments towards tuition fees for children to any school or college or university or similar institution. (Only for 2 children)
Conditions	Upper Limit is Rs. 1,00,000 (Rupees One lakh) which can be any combination of the above list.
Deductions
Limitations	The investment can be from any source and not necessarily from income chargeable to tax.

Medical Insurance

Applicable If	Premium paid on medical insurance for oneself, spouse, parents and children Cheques paid by proprietor firms
Conditions	The house should not be in your kids, spouses or your own name.
Deductions	Up to Rs 30,000 (additional to Rs.1,00,000 savings) Up to Rs. 20,000 (for senior citizens)

(See Next Section)

Applicable If	All life insurance plans gives you the tax benefit
Conditions	You should have Life Insurance Policy
Max Deductions	Complete amount invested in life insurance policy is tax free. Payout from life insurance policy is tax free.
Limitations	Go for plan which is suitable to your life and your financial planning. You need not buy every year new policy. If you think that you have already invested enough in life insurance plan but want to invest again then you should go for ULIP plans.

Applicable If	You have taken a Home Loan from any bank
Conditions	The house should be in your kids, spouses or your own name.
Max Deductions	Only principle repayment can be exempt Tax deduction on the interest component comes under section 24 and will depend upon whether home is rented or self occupied.
Limitations	Over a period of time the principle payment increase and the interest payment decrease.

Applicable If	You have taken an Education Loan from any bank
Conditions	The loan should be in your kids, spouses or your own name.
Max Deductions	Only principle repayment can be exempt
Limitations	The interest that you pay will be tax deductable.

National Savings Certificate (NSC)
Investments	In multiple of Rs. 100/-
Interest Rate	Return at interest rate of 8%
Maturity Period	6 years
Upper Limitation	No
Lower Limitation	Rs.100/-
Availability of Loans	Yes
Mode of Operation	Singly, jointly, or by a minor with his/her parent or guardian
Max. Deductions	Under section 88 of the Income Tax Act, 1961 any person can take benefit in income tax on amount invested in this scheme Under section 80L of Income Tax Act, 1961 there is a provision of benefit on interests coming from scheme.

Public Provident Fund (PFF)
Investments	From your Salary
Interest Rate	Return at interest rate of 8%
Maturity Period	15 years
Upper Limitation	Rs. 70,000/-
Lower Limitation	Rs. 500/-
Availability of Loans	The first loan can be taken in the third financial year from the date of opening of the account, or upto 25% of t credit he amount at at the end of the first financial year.
Mode of Operation	Singly, jointly, or by a minor with his/her parent or guardian (Nomination facility available)
Max. Deductions	Under Section 88 of Income Tax Act, 1961 there is a provision of tax benefit by investing in this scheme Interest on this scheme is tax free.

Government Employees
Interest Rate	Return at interest rate of 8%
Maturity Period	3 years
Upper Limitation	Total retirement benefit
Lower Limitation	Rs.1000/-
Max. Deductions	According to Income Tax Act, 1961 interest on this scheme is tax free.

Public Sector Employees:
Interest Rate	Return at interest rate of 9.5% payable half-yearly on 30th June and 31st December respectively
Maturity Period	3 years
Upper Limitation	Total retirement benefit
Lower Limitation	Rs.1000/-
Mode of Operation	Retired PSU employees in his/her own name or with the spouse, jointly.
Max. Deductions	According to Income Tax Act, 1961 interest on this scheme is tax free.

According to Income Tax Act,1961 there is a provision benefit in Income Tax if assessee has an income as a dividend on investment in any of the following:

• Shares
• Mutual Funds
• Unit of UTI

This dividend can be given by any company or co-operative society.

Infrastructure Bonds: Investment in bonds issued by specified Infrastructure companies is also eligible for Section 80C deductions. Investment in Infrastructure bonds is just one of the various options available for the purpose of Section 80C deduction.

Bank Term Deposits: Term deposits with scheduled bank for minimum tenor of 5 years.

Term deposit with Post Office: Minimum tenor 5 years.

NABARD Bonds: Investment in notified bonds issued by National Bank for Agriculture and Rural Development (NABARD) is also eligible for Section 80C deduction.

It is one of the best Income Tax Saving Scheme. It can be operated by either singly or jointly. In case of minor, with parent/ guardian. It is available throughout the year. There are several types of post office schemes depending upon the type of investment and maturity period. Post office schemes can be divided into following catagories:

• Monthly Deposit
• Saving Deposit
• Time Deposit
• Recurring Deposit