Income Tax Saving New Tricks: You can save tax on your income in many ways. Know the tricks here.

Income Tax Saving New Tricks: You can save tax on your income in many ways. Know the tricks here.
Tags: Income Tax

A salaried person may file an income tax return in various ways. These tax-saving methods can help an income taxpayer save much money if used wisely. But before it becomes a problem, the plan to reduce income tax should be made at the start of the year itself. You won't have much success if you prepare your taxes at the end of the year. Therefore, it is best to invest in tax-saving plans right at the start of the fiscal year.

 

The simplest and most well-liked method of reducing income tax, according to Vijay Singhania, CEO of TradeSmart, is investing in a tax-saving instrument, according to a Live Mint story. The Income Tax Act of 1961's Section 80C details the investment-based tax exemption plans available to income tax filers. According to Singhania, an income taxpayer can save money on taxes by investing in other pension plans such as Employees Provident Fund (EPF), Public Provident Fund (PPF), Fixed Deposits with a minimum tenure of 5 years or more, Life Insurance policies, ELSS Mutual Funds, and National Pension Scheme (NPS).

 

According to Singhania, there is currently a choice between the old and new tax systems for paying income taxes. The income taxpayer can receive tax exemption on investments up to Rs 1.50 lakh if they choose to pay income tax by the previous tax system. Because the income tax rates are lower in the new tax regime, if a taxpayer decides to pay income tax under it, he loses this exemption.

 

Public Provident Fund (PPF)

PPF is regarded as the best government scheme for minimizing income taxes (Public Provident Fund). PPF investments are limited to Rs. 1.5 lakh each year. In this, investments are eligible for income tax exemption under section 80C. Moreover, the government guarantees investment in PPF, meaning that the money won't disappear.

 

National Pension Scheme (NPS)

This is a government scheme for saving for retirement. A profit of Rs 50,000 can be invested under Section 80C of the Income Tax Act in addition to paying Rs 1.5 lakh in taxes. The minimum investment amount is Rs. 1,000 each month. Any Indian citizen between the ages of 18 and 65 may open an account under this scheme.

 

Life Insurance

Investments in unit-linked insurance plans are exempt from taxes (ULIPs). Tax exemptions for premiums paid into ULIPs beyond Rs 2.5 lakh are unavailable. The maturity income of life insurance policies is free from tax under section 10 of the current income tax regulations (10D).

 

Fixed Deposit (Tax Saving FD)

You can reduce your income tax by investing in tax-saving fixed deposits. The investment period for tax-saving FDs is 5 years. Interest rates on tax-saving FDs fluctuate from time to time. Therefore, tax-saving FD investments are a secure and return-guaranteed choice. Under section 80C, you are eligible for a tax exemption on FDs up to Rs 1.5 lakh each year.

 

Equity Linked Savings Scheme (ELSS)

The only mutual fund that gives a Section 80C tax exemption of up to Rs 1.5 lakh is the Equity Linked Savings Scheme (ELSS), a form of equity fund. In ELSS, annual returns and profits up to Rs 1 lakh are not subject to taxation.

 

 

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