Paying Income tax at the end of financial years becomes challenging for most of the people. Most of the hassle bustle is based on the submission of various insurances and rent receipt. But if you want to save on taxes and safe yourself from unnecessary financial stress than it is important to check out all the instruments for tax-saving.
In order to know that how much you can actually save on taxes it is important to understand the slabs. Based on the annual income of an individual, the tax payers are categorized in income tax slab. So, if you are really looking for a way to save on taxes, which eventually everyone does then you can either, invest your finance in markets and insurance or put them in saving instruments for future. Moreover, you can also use the different allowances to save your taxes. Below we have given some insight on ways to save taxes.
Buying insurance policies have many benefits but one of its major benefits is that it helps you to save on taxes. Let us discuss how insurance helps one save income tax.
Life Insurance: Life insurance policies not only provide life coverage to an individual but are also an excellent way to save on taxes. In life insurance policy one need pay premiums every year which in return is paid back in large lump-sum amount in case of demise of the insured person. The premium paid for life insurance policies are liable of tax deduction under section 80C of Income Tax Act.
ULIPs: Unit Linked Insurance Plan are insurance plans are market linked plan. Under this plan the investors are offered the benefit of both investment and protection under single plan. Financial investments done under this scheme are also eligible for tax deduction plus it also provides an opportunity to help your money grow.
Heath Insurance: As the cost of medical treatment and medical care is accelerating rapidly; buying a health insurance policy has much become a necessity. Health insurance policies ensured that you have enough finances to take care of your medical expenses. If you pay premiums for your health insurance, then you can save your taxes up to Rs15,000 to Rs20,000.
Investments are financial instruments where you invest today and reap benefits later. Besides this, investments also help you to save on taxes. Some of the common investment options are-
Mutual Funds: Equity Linked saving schemes (ELSS) can be used to gain tax benefit. ELSS comes with a lock-in period of 3 years. The lock-in period of mutual fund is less as compared to fixed deposit and PPF’s. One of the major benefits of this scheme is that it offers a huge return on investment.
Tax Saving Fixed Deposit: Fixed deposit offered by different banks is used as a tax saving instruments. One can put an amount Rs1lakh to Rs1.5lakh in these deposits and can gain an attractive interest along with the benefit of tax saving for that year. The fixed deposit comes with a lock in period of 5 years.
Post Office Time Deposit- Post office time deposit is same as fixed deposit provided that the person has no limits on how much amount he/she can put in it. The minimum amount that is required to put in post office time deposit is Rs200 and has a compelling interest rate as 8.5% per annum. With a lock in period of 5 years an individual can avail tax benefit under section 80C of Income Tax Act.
National Saving Certificates- National Saving Certificate can be availed from the post office. One just need to do a minimum investment of Rs100. NSC comes with a lock in period of 5 years and 10 years and the investments made in NSC’s are eligible for tax exemption.
Provident Funds: Provident Funds also known as Pension Fund as they are created with a goal of long term return. Deposits made in provident fund are eligible for tax deduction under section 80C of Income Tax Act.
Home Loans for Construction or Buying a House: Home loans are also an effective way to save taxes. The principal and interest paid each year up to Rs1,00,000 are eligible for tax benefit under section 80C and Rs1.5 lakh for the interest under section 24 of Income Tax Act.
Home Loan for Renovation
While many people know about the advantage of declaring home loan for tax exemption, very less people knows that home loan taken for reconstruction and renovation is also eligible for tax deduction.
|You may like to Read: How to efile Income Tax|
Other Tax Saving Instruments-
Some Additional Tips to Save on Taxes-
1. The interest paid on education loan in the country comes under the section 80E of the tax deduction.
2. Under section 80RRB, the tax deduction is applicable on the income earned by way of royalties and patents. For the patent registered under the patent act,1970 up to the amount of Rs3,00,000 income tax can be saved.
3. Under section 80U of Income Tax Act, tax deduction is applicable for disable people. To avail the tax benefit under this section one need to show their disability certificate. Depending on the severity of disability up to Rs1,00,000 can be non-taxed.
By choosing the most suitable tax saving investment plans in your agenda you are save a lot and can ultimately achieve your financial goal at the end of the year.
Most Searched Topics
- Top 5 Best Mutual Fund Plans to Invest in India in 2017
- Section 80D Deduction for A.Y 2016-17
- Section 80C Deduction for A.Y 2016-17
- What is Form 16 & How To Download It
- Income Tax Exemptions for Salaried Employees
- Tax Benefits on a Health Insurance Policy
- Section 80D Mediclaim Income Tax Deduction for Individual
- Section 80D of ITA: Deductions for Medical Insurance and Preventive Health Checkups
- How to Check Income Tax Return Status Online?
- Income Tax Planning For Salaried Employees in India
- Income Tax Benefits in FY 2016-17 on Home Loan Interest
- Income Tax Deductions under Section 80D of Income Tax Act, 1961
- Advantages and Disadvantages of the Tax-Saving Fixed Deposits
- How to Pay Income Tax Online in India 2017
- How to Save Tax on Salary?
- Tax Exemption on Health Insurance under Section 80D
- Compute Your Income Tax through the Income Tax Calculator
- Section 80D Tax Deduction For Medical Insurance Premium And Mediclaim Reimbursement Allowance Under Section 10
- How to Save Tax with Health Insurance?
- Know about Mediclaim Deduction for the AY 2016-17 and Plan your Future with us at Policy Bazaar!
- Income Tax Filing For the Freelancers
- How to File Income Tax Return Using Form 16
- Understanding Salaried Income and Its Tax Computation
- An Insight into Section 80D Deductions for Health Insurance Premium and Checkups
- Systematic Investment Plan (SIP) - Features, Benefits & Process of SIP
- How to Send Your ITR-V to CPC Bangalore
- How to Check ITR-V Receipt Status?
- How to Make Corrections to TDS Returns?
- eFiling Income Tax
- What is TDS (Tax Deducted at Source)?
- Tax Benefits on Children's School Fees
- How To Save Income Tax on House Rent Allowance
- Income Tax Slabs Rates for Financial Year 2016-17
- Handling Income Tax Notices form IT- Department
- What is the Difference between AY and FY?
- How to file Income Tax Return Online in India?
- Tax Exemption on Insurance Premiums
- Learning to Calculate Income Tax Levied on Salary Income
- How to View Filed TDS Statement on Income Tax Website?
- Best ways to save tax - Income Tax Saving Tips
- Take Home, Net Gross Salary vs CTC
- How to get Income Tax Return Form?
- Let's Talk About Part A and Part B in Form 16
- What is Reliance Tax Saver Plan?
- Advance Tax Payment Guide
- 5 Common Tax-Saving Mistakes and How to Avoid them
- Easy & Simple Steps to Upload TDS Returns Online
- NRI's without Pan: How to Avoid Higher TDS
- Complexity of Income Tax on Taxable Income
- All You Need To Know About From 27C
- TDS Will Not be deducted on Interest Paid to MUDRA
- Calculating Estimated Business Taxes
- Why Should You E-File Your Tax Returns
- Control the Currency with Policy Bazaar: Income Tax Guide For Start-ups
- Missed the Tax Filing Deadline? Here's what you can do about it
- File It Right: How to Avoid Rejection of Your ITR-V
- Tips for Startups while Generating Form 16
- How to Reduce the Burden of Income Tax and Increase Your Take-Home Salary?
- Useful Tips on Tax-Planning in India
- Income Tax Refund - Basics, Process
- Income Tax Deductions under Section 80
- Best Way to Calculate Your HRA (House Rent Allowance)
- Most Read
- How to Revive Lapsed LIC Insurance Policy Online
Date: 15 September 2017
- Tip to turn Habits into Healthy Ones: The Perfect Health Guide for Women
Date: 15 September 2017
- How Insurance Sector Faces Initial Hiccups Post GST
Date: 15 September 2017
- How to Save Premium Cost on your Life Insurance Purchase
Date: 13 September 2017
- Why Renewal of the Term Insurance Policy is Important?
Date: 11 September 2017
- Best 5 LIC Policies To Invest in 2017
Views : 972002
- LIC Policy Status: Check LIC Policy Details and Statement Online
Views : 920290
- Best Term Insurance Plans in India with Claim Settlement Ratio
Views : 367690
- A Quick Guide To Post Office Monthly Income Scheme
Views : 357467
- Best Health Insurance Plans in India
Views : 308234