Usually most people are worried about tax. This happens because we do not do proper tax planning. To avoid tax, it is necessary to invest your personal money properly. For this you will have to take some necessary steps. This financial year is about to end. Therefore, we should do tax planning to avoid tax stress. You should monitor your tax due. This means keep an eye on your gross income and taxable income. Income from tax deductions and deductions from gross income is called taxable.
On the other hand, income consisting of salary and other sources of income is called gross income. There are many investment options in India in which tax deduction can be availed under Income Tax Act on investing. So do your tax planning in the last days of the financial year and invest in tax saving options. This will help you save tax. Therefore, information related to this is being given through this article.
Health Insurance
Health insurance plans can help you save tax. Through these schemes, you can get tax benefits as well as cover against your health care expenses. This is an attractive scheme among the customers due to the double benefit. Under Section 80D of the Income Tax Act, a person under the age of 60 can get the benefit of tax deduction of up to 25 thousand rupees per year on payment of the premium of the health insurance policy of himself, his life partner or dependent children. If you are over 60 years of age, then you can get the benefit of tax deduction of up to 50 thousand rupees per year on paying the premium of health insurance scheme. Also, if you are buying a health insurance policy for your parents, you can avail additional tax deduction of Rs 25,000 or Rs 50,000 depending on their age under Section 80D. If you and your parents are over 60 years of age, you can get a tax deduction of up to Rs 1 lakh per year.
Employee provident fund
Employee Provident Fund (EPF) scheme available to salaried employees can also be used to avail tax deduction. You get the benefit of tax deduction of up to Rs 1.5 lakh a year under Section 80C of Income Tax on your contribution to the scheme. Under Section 80C, there are benefits of tax deduction on investments made in many options. By combining all the investments, you can avail up to Rs 1.5 lakh per year. PPF, SCSS, NSC, Post Office Scheme etc. get tax benefits under Section 80C.
Equity Linked Savings Scheme (ELSS)
It is a mutual fund scheme that offers the benefit of tax deduction. Under this scheme, your money is invested in the stock market. ELSS offers higher returns, but also has higher risk. To invest in ELSS scheme, visit the website of your preferred fund house and according to you choose the ELSS scheme which has the potential to give higher returns. You can invest in the scheme through online payment. You can claim a tax deduction of up to Rs 1.5 lakh per year under Section 80C of the Income Tax Act on investment in an equity linked saving scheme. This means that you can reduce your tax by subtracting the amount invested in ELSS from your total taxable income.
Life insurance
There are many ways to save tax in a life insurance plan. Life insurance schemes are given priority by Indians to save tax as well as to secure their lives. You can avail tax deduction under Section 80C of Income Tax Act for investing in life insurance policies. There are various types of life insurance policies in the market such as term plans, money back policies, endowment plans and whole life insurance plans etc. Death benefit is exempt in these.
5 year tax saver bank FD
Investing in a 5-year tax saver FD gives tax benefits under Section 80C. This FD has a lock-in period of 5 years. Withdrawals are not allowed before maturity. Its proposed interest rates are the same as normal FDs. It is the best investment option for those who want fixed returns with low risk and tax benefits.
Planning your tax in time is the best way to remain stress free. If your financial year is not going well, don’t worry. The new financial year is going to start from April. Invest in tax saving options from April and start afresh.
