Not many realize the numerous benefits that are there to be had if one were to regularly set aside a certain portion of one's income for the future. Apart from providing a cushion of financial security and of course the magic of the power of compounding, investments, if structured and planned properly, could lead to substantial benefits on the taxation front as well. By making the right investments, an individual can reduce his tax liability by as much as Rs 16000. The aforesaid reduction in tax comes in the form of a tax rebate. To put it simply, a tax rebate is a deduction from tax.
Tax rebates help minimize or reduce one's tax liability.
This entitles you to a maximum rebate of Rs16000. For certain categories of professionals, like authors , playwrights, artists musicians and sportsmen, the rebate is 25 per cent of the amount invested , subject to a maximum rebate of Rs 17,500 in a year. Payments of up to Rs 20,000 made to specified institutions are entitled for the rebate. These are popularly known as infrastructure bonds. In other words you get a maximum rebate of Rs 12,000 on an investment of Rs 60,000.