Income and expenses are two sides of the same coin. And one liability that you cannot afford to turn a blind eye to is income tax. While you cannot evade paying taxes, the best you can do is to minimise their effect on your wallet. 

What are the Tax Slabs ? 
The basic exemption limit for personal income tax is:
Rs 200,000.
Rs 250,000 for the age of 60 years or above but below 80 years.
Rs 500,000 for resident individuals of the age of 80 years and above

Income tax rates for the tax year 2012-13 applicable for individuals, Hindu Undivided Families, Association of Persons and Body of Individuals, can be tabulated as follows:

Note:

• Education cess is applicable at a rate of 3 per cent on income tax (inclusive of surcharge, if any)
• Marginal relief may be provided under specific conditions
• Income Tax Implication for Mutual Fund Unit Holders

Income Tax Implication for Mutual Fund Unit Holders

What is Section 80 C ? 
No matter what tax bracket you fall under, Section 80 C of the Income Tax Act acts as a saviour, outlining deductions that can be made from your taxable income. 

• Section 80 C allows certain investments and expenditures to be exempted from tax.
• You need to invest in the instruments specified under this Section and deduct that amount from your gross income. You are liable to pay tax only on the income derived after this deduction.
• Investments up to a maximum of Rs 1,00,000 only are set for deduction for any tax bracket.

What are Tax saving options available ? 

Other deductions:

In 2008, Senior Citizens Saving Scheme 2004 and the Post Office Five Year Term Deposit Account have also been brought under the purview of this Section an additional deduction of Rs 15,000 allowed under Section 80 D to individuals paying medical insurance premium for his/her parent(s). 

What are Equity Linked Saving Schemes?
Equity linked savings schemes (ELSS) are mutual funds that help you gain the twin advantage of earning equity-linked returns with the additional benefit of saving tax. ELSS have a lock-in period of 3 years, which encourages long term investing among investors and gives ample time for the fund manager to manage a portfolio of stocks that can outperform over a period of time. 

Why is the Equity Linked Savings Scheme a winner ?
Over a longer horizon, it has been witnessed that equities tend to outperform most other asset classes in terms of returns.

Advantages of ELSS

• Investments in equity deliver returns over a longer period.
• A lock-in of 3 years ensures you stay invested for a longer period, thus allowing your money to grow over a period of time.
• ELSS will endeavour to provide higher returns with tax-efficiency
• One has the option of investing small amounts of Rs 500 each month in ELSS through Systematic Investment Plans (SIPs)

 Disclaimer:

The above is provided only for general information purpose. In view of the different nature of tax benefits, each investor is advised to consult with his or her own tax consultant with respect to the specific tax implications arising out of their participation in the any of the schemes.