Paying income tax at the end of the financial year has become challenging for many of the people who usually pay taxes. Most of the hassle bustle is actually based on the submission of various insurance and rent receipt, but if you want to save the taxes and save yourself from the financial stress of unnecessary paying, then it is important for you to check out all the instruments for taxpaying.
There is the host of whole legitimate ways of saving the tax under Income Tax Act 1961; these include tax saving mutual funds, NPS, insurance premiums, medical insurance, and many others. As soon as the filing session begins, the salaried class is the frenzy about taxes, they must sell out for the financial year and it is quite crucial to understanding your tax slab and what each of your salary breakup component means.
In order to know how much actually the users can save in their taxes, it is crucial to understand the slabs. The taxpayers are categorized in the income tax slab, based upon the annual income of the individual user. So, if you are really looking out for the ways that can help you to save your money on paying taxes and save your tax paying issues, which eventually everyone does then you can either invest your finance in the markets and insurance or put them in saving instruments for future. Moreover, you can also use the different allowances to save your taxes, therefore, below are given some of the insights on ways how to save tax/save money as:
Use up your 1.5 lakh limit under section 80c
The below-mentioned investments/education is all subject to a cap of Rs 1.5 lakh, they are either or the investment and making a type of investment that will reduce room for another as:
- Tax saver FDs- You can get the tax deduction of up to Rs 15. Lakh under the 5-year tax saver FDs and the carry of the fixed rate of interest currently between 7-8%, however this interest on these FDs is taxable.
- PPF- PPF which stands for a public provident fund is the government established saving scheme with the texture of 15 years available at most of the banks and post offices all over India. Its rate changes every quarterly but currently, it is 8% and the interest on PPF is tax-free.
- NSC- NSC stands for the national saving certificate which has the tenure of 5 years and the fixed rate of interest and the current rate is 8%. The interest on NSC is also automatically counted towards Rs 1.5 lakh 80C limit and is tax deductible if no other investment is using is the limit.
- Senior citizen saving scheme- Contribution to the SCSS is the tax deductible up to 1.5 lakh which has the tenure of 5 years and is available to those above 60 years of age.
To save your taxes or save money you can invest in the following as:
Purchasing the insurance policies may have many advantages but it’s one of the most prominent advantages is that it helps you to save on taxes and money as well. You can have many types of insurance for you to save money on your taxes as:
- Life insurance- Life insurance policies not only provide life coverage to an individual but are also an outstanding way to save on taxes or save your money.
- Health insurance- As the cost of medical treatment and medical care is the accelerating rapidly, buying health insurance can help you lot to save your money on paying taxes.
Investments are the financial instruments where you invest today and reap benefits later and besides all these, the investments also help you to save on taxes. Some of the common investment options are given below as:
- Mutual funds- Equity linked saving schemes can be used to gain tax benefit and it comes with the lock of 3 years period. The lock-in period of a mutual fund is quite less as compared to the fixed deposited and PPFs.
- Tax saving fixed deposit- Fixed deposit offered by different banks is used as the tax saving instruments and one can put an amount of Rs 1 to 1.5 lakh in these deposits and can gain attractive interest along with the benefit of tax saving for that particular year. This comes with the lock of 5 years period.
- Home loans – Home loans for construction of house are also one of the major and effective ways to save money on taxes. The principal and interest paid each year to be 1 lakh are eligible for the tax benefit under section 80C and Rs 1.5 lakh for interest under section 24 of the income tax act. While many people are not aware of the advantage of declaring home loan for tax exemption, very fewer people are aware of this that home loan taken for reconstruction and renovation is also eligible for the tax deduction process.
Well, there are many more ways by which the users can get help to save their taxes or save their money paid on these taxes. Amount of gifts on marriage and inheritance from the will are also tax exemption. Therefore, it is crucial to note that not all the tax savers are the same in terms of asset class, so one should choose to use the instrument that best suits them and their requirements.