All taxpayers are mandated to file their income tax return (ITR). The income tax returns comprise the details of your annual income, including the tax liability which is obligated to be paid. The Government of India provides tax rebates along with exemptions under distinct sections of the Income Tax Act 1961. Tax experts have recommended five effective tax-saving methods for the financial year 2023.
The intent is to motivate people to increase their investments. Various methods are mentioned below that you can comply with to diminish your tax outgo.
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TIP 1 • Invest in tax-saving instruments
The Government of India on some instruments has permitted some tax deductions on the invested amount, under Section 80C of the Income Tax Act. You are enable to claim for the tax deduction with the highest limit of Rs 1.5 lakh on the investments that would have been made in these instruments.
Some of the tax-saving ways for investment in 2022 are as follows:
- Public Provident Fund (PPF)
- Employees’ Provident Fund (EPF)
- Equity Linked Savings Scheme (ELSS)
- National Pension System (NPS)
- Sukanya Samriddhi Yojana (SSY)
- Senior Citizen Savings Scheme (SCSS)
- Fixed Deposits (FDs) of 5 years or more
As per tax experts, you can save your taxes via doing the investment in the above-stated schemes as well as developing your long-term financial wealth.
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TIP 2 • Select the precise tax regime
Currently, for the citizens of India, there are two types of tax regimes. While furnishing the return you could opt for any one out of two. Appropriate tax regimes would be vital for securing the max tax savings. An offer for a lower tax rate is provided by the new tax regime but the same does not allow tax deductions. Therefore when you ask for tax deductions under Section 80C of the Income Tax Act, you should proceed with the older tax regime. If not, you could opt for a new tax regime for diminishing your income tax outgo. An online income tax calculator could support you in finding out the difference between the new and old tax regimes.
TIP 3 • Buy health insurance for yourself and your family
You can also save tax by purchasing health insurance policies for yourself, including your family. An assessee is empowered to claim a deduction of up to Rs 25,000 for paying the health insurance premiums for themselves, including their spouses and children under Section 80D of the Income Tax Act. Under that section as a taxpayer, a senior citizen could claim a tax deduction with a limit of up to Rs 50,000. When you purchase health insurance for your parents, you can save another amount of Rs 50,000.
TIP 4 • Avail of the tax advantages on home loans
You are eligible to claim the deductions related to your loan interest and principal amount, if you had taken a home loan via any bank or non-banking financial institution. Under Section 24, the statute allows for the highest deductions of Rs 2 lakh concerned with the home loan interest and Rs 1.5 lakh under Section 80C of the income tax related to the home loan principal.
TIP 5• Income tax return filing within stipulated durations
Every year an individual or a company is required to file the ITR prior to the 31st of July or the date mentioned by the income tax department. A penalty shall be imposed when you are unable to file the income tax return as per the stated due date. Filing the income tax return within the mentioned last date is vital for other purposes also such as availing of a home loan applying for immigration documents, doing a transaction of higher value, etc.
For saving tax different people invest in tax-saving instruments at the end of a financial year. However, the effective time to invest in the tax-saving schemes would be at the start of the financial year. Through various tax-saving modes, you are able to invest regularly for securing taxes and build your wealth. Hence you should learn about the best tax-saving investment schemes and must invest in merely those kinds of instruments that are relevant to you.
