We're happy to bring in the cash, but we cringe at seeing any of it go out the door, particularly in taxes. It's not only you, but all of us are in the same boat. How can you save every single penny in light of that? Through the best tax saving schemes.
Even though it's still early, it could be in your best interest to do some quick math and get your tax return in as soon as possible. An even more considerable windfall might be yours if you play your cards perfectly before the tax filing deadline this year. If you want to save much money on your taxes, consider the following advice.
1. Public Provident Fund (PPF)
The fact that PPF qualifies for the exempt tax status is one of the main factors contributing to its popularity. Under section 80C of the income tax legislation, taxpayers may deduct money invested throughout the year. Banks and post offices offer PPF accounts. The maximum deduction is Rs. 1.5 lakhs.
2. ELSS Mutual Funds
ELSS are mutual fund investment plans that invest heavily in equity, and the fund has the lowest lock-in time (3 years) of all investment products. Investing in ELSS funds using the Best Demat Account in India is wise.
Investing in ELSS funds is tax-deductible up to Rs. 1.5 lakh under Section 80C. Both lump sum investments and SIP investments qualify for this deduction.
3. Health Insurance premium
Due to this, the taxpayer can gain in two ways. In the first place, having insurance coverage in a medical emergency. Second, the tax advantage for purchasing an investment product under the Income Tax Act section 80D.
4. ULIP
ULIP ensures that, in the event of a death, one's family is financially secure. The taxpayer may purchase a life insurance policy to take advantage of the benefit provided under the income tax laws.
Under section 80C, life insurance premiums are deductible up to Rs. 1.5 lakh. Under section 10(10D), insurance maturity income is tax-free. If the premium is under 10%, tax-free income is assured. Best banks like HDFC's Best trading app let you apply for ULIP from home.
5. National Savings Certificate
The National Savings Certificate is a government-sponsored fixed-income investment you may open at any post office. It's a savings bond plan that helps subscribers save on income tax under Section 80C. There is no upper limit on NSC purchases; only investments of up to Rs 1.5 lakh yearly may gain tax savings.
6. Tax-savings fixed deposit
Investments in tax-saving fixed deposits are deductible from your taxable income under section 80C. Banks set interest rates based on a variety of factors. However, the Indian government guarantees the interest rate you earn. A minimum lock-in term of five years might help you save on taxes.
7. Senior Citizen Savings Scheme
India's older residents may save on income tax using a senior citizen savings plan. The scheme, offered via banks and post offices, provides one of the highest savings rates.
A contribution made by an individual into this scheme qualifies as a contribution under section 80C up to Rs. 1.5 lakhs from taxable income. If the interest is more than Rs. 50,000, it is entirely taxable but is eligible for a tax deduction.
8. School Tuition Fees
The income tax act 1961 allows a deduction for school fees under section 80C. A deduction of up to Rs. 1.5 lakh may be made for tuition fees paid to any accredited university, college, school, or other educational facilities. But only tuition fees are tax deductible. Any other fee, such as a donation, development fee, etc., is not deductible.
9. Sukanya Samridhi Yojana (SSY)
In 2015, the Indian government implemented it as a component of Beti Bachao Beti Padhao. The program allows investors to set money aside for the future of girls. Under Section 80C, investments made under the Sukanya Samriddhi Yojana are tax deductible. The method will enable taxpayers to deposit fixed-income funds regularly and earn interest.
A minimum yearly payment of 15 years is necessary to participate in the program, which has a lock-in duration of 21 years. The government establishes the interest rate at which the plan matures.
It will be disconnected if you do not pay your account for a predetermined period. You must put down an Rs. 250 initial deposit and an Rs. 50 penalty to revive the account.
10. Repayment of an education loan
The income tax law's Section 80E allows for the deduction of loan repayments. For up to eight years or until the loan is repaid, whichever comes first, the interest on student loans is tax deductible. Students who pay EMIs for their loans can claim a deduction.
11. National Pension Scheme (NPS)
National Pension Scheme (NPS), one of the outstanding tax-saving programs, lets you create a future corpus with a monthly income. Tier-1 contributions are tax-deductible under section 80C of the Income Tax Act and are locked until the subscriber turns 60.
Individuals are permitted to deduct up to Rs. 1.5 lakh by investing in NPS under Section 80CCD. Also included is a new sub-section 1B that provides an extra deduction of up to Rs. 50,000 for NPS payments paid by individual taxpayers.
12. Interest paid on home loan
For an individual seeking to claim the interest component on a housing loan as a tax deduction, the conditions are:
· The purchase or development of a property requires a mortgage.
· Before the five years of the loan expires, the homeowner must construct the home
· Section 24 allows up to Rs. 2 lakhs in loan interest deductions.
Renters cannot claim a maximum interest rate. But only Self-occupied properties qualify.
· You may deduct interest on pre-construction mortgages. The deduction is allowed in five equal installments upon construction or property purchase completion. Maximum is Rs. 2 lakhs.
13. Donations made to charitable institutions
Under Section 80G, charitable contributions are tax-deductible, enabling an unlimited charitable deduction. Beyond Rs. 2,000, cash transfers are not tax deductible, and you must have the organization's stamped receipt to make this deduction.
14. Rent paid, and no HRA received
You get HRA as part of your salary and use it to save money on taxes. But sometimes it's not included in the employee's salary. In this situation, the taxpayer cannot claim a regular HRA deduction, even if they pay rent. In such circumstances, taxpayers must claim section 80GG tax benefits.
15. Savings bank account interest
The 1961 tax statute deducts savings account interest, and individuals and Hindu undivided families may deduct interest under section 80TTA. Over Rs. 10,000 in interest is taxed as "Other Income," depending on tax slabs.
But for non-seniors, the section is 80TTB. Seniors may deduct up to Rs. 50,000 from their gross income under section 80TTB.
The Final Word
As an investor, you should consider how much tax you will have to pay on your assets. There are often legal ways to keep more of what you earn by lowering, delaying, or even getting rid of taxes on investment gains.
Knowing the best ways to lower your taxes and keep more of your own money pays off. Remember that if you want to make money on the stock market, you have to put money into it, and you can only do that if you have money left over after paying taxes and other bills.
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