Saving on taxes and increasing income can be achieved through effective tax planning. The Income Tax Act offers deductions for various investments, savings, and expenditures incurred in a financial year. Times Now briefly explains five tax-saving tips to effectively plan and utilise every hard-earned penny.
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Here are the Five Best Ways To Save Income Tax
1. Home Loan Benefits under Section 80C:
Purchasing a home loan can provide tax benefits under Sections 80C and 24(b). The annual income spent on repaying the principal amount qualifies for deductions up to 1.5 lakh under Section 80C. Additionally, Section 24(b) allows tax exemption on the interest portion of the home loan up to Rs 2 lakh per year.
2. Health Insurance Policy:
Tax deductions under Section 80D can be claimed for the annual taxable income spent on health insurance premium payments. Different sums are exempt based on the age of the insured.
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3. Investing in Government Schemes:
Various government schemes offer high returns and tax waivers. Investments in schemes like Senior Citizen Savings Scheme (SCSS), Sukanya Samriddhi Yojana (SSY), National Pension Scheme (NPS), and Public Provident Fund (PPF) can provide tax waivers up to Rs 1.5 lakh under Section 80C.
4. Life Insurance Plans:
Premium payments for life insurance plans are eligible for deductions under Section 80C. The sum promised received at maturity or early death of the insured is covered under Section 10(10D). Tax benefits of up to Rs 1.5 lakh can be claimed on annual premiums paid.
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5. Investment Options under Section 80C:
Section 80C includes various popular tax-saving options with a limit of Rs. 1.5 lakh in a financial year. This includes investments and expenses that individuals and HUFs can claim deductions on.
Understanding and implementing these strategies can contribute to substantial tax savings, offering financial benefits and increasing overall income. Always consult with a financial advisor to tailor these approaches to your specific financial situation.
