Tax saving tips which can help you to save tax on your income.
Income tax is one of the major sources of revenue for the government. It helps the government fund various development projects, social welfare schemes, and infrastructure initiatives that benefit the country as a whole.
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The income tax system in India is progressive, which means that those who earn more pay a higher percentage of their income as tax. This redistribution of wealth aims to reduce income inequality and promote social justice.
Why do you get options to save tax?
The government provides various deduction options in tax saving to encourage individuals to save and invest for their future. It is believed that promoting savings and investments are essential for the overall economic development of the country.
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The tax deductions help in reducing an individual’s tax liability, which ultimately leads to more disposable income in the hands of taxpayers.
Saving tax by utilising various deductions
The Income Tax Act allows tax deductions for certain types of investments, such as contributions to provident funds, donations and life insurance premiums etc.. These deductions encourage people to save and invest, which can help to spur economic growth.
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Here are some simple tax-saving tips that you can follow. However, individuals must note that the information is for informational purposes only and should not be considered as professional advice. You should seek professional advice to your specific circumstances before making any financial decisions.
- Invest in tax-saving instruments such as Public Provident Fund (PPF), National Savings Certificate (NSC), Equity-Linked Savings Scheme (ELSS), and more. Investing in these instruments can help you save tax.
- Claim deductions: You can claim deductions for various expenses such as medical expenses, education expenses, and more. Make sure to keep all the necessary receipts and bills to claim deductions.
- Make use of Section 80C: Under Section 80C of the Income Tax Act, you can claim deductions of up to Rs. 1.5 lakh on investments made in tax-saving instruments such as PPF, NSC, ELSS, and more.
- Make use of Section 80D: Under Section 80D, you can claim deductions on health insurance premiums paid for yourself, your spouse, and your dependent children.
- Make use of Section 80TTA: Under Section 80TTA, you can claim deductions on the interest earned on savings accounts up to a maximum of Rs. 10,000.
- Keep track of your investments: Make sure to keep track of all your investments and claim deductions accordingly.
- File your tax returns on time: Filing your tax returns on time can help you avoid penalties and also ensure that you don’t miss out on any tax-saving opportunities.
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Taxpayers must note that the deductions available to you are limited to the regime (old and new tag regime) you chose while filing the income tax return.
It’s important to consult with a tax professional before making any decisions about tax planning to ensure that you are making the most of the available options.
