Do you start sweating at the mention of taxes? Taxation is a sensitive subject and most people feel the pinch while paying taxes. Parting with a considerable chunk of you hard earned money is undoubtedly a painful experience. However, nobody can escape from the clutches of taxes; it is mandatory for every citizen of India. Therefore, to ease the worries of the taxpayers, the government of India, has passed various tax saving laws. Many Indians are unaware of the various options to save tax legally and end up resorting to illegal means. The Indian Tax Laws are very simple and easy to comprehend. By utilizing the various provisions of the Income Tax Act, you can save a substantial amount on taxes. Here are a list of useful tips to save up on income Tax:-
- Investing in Provident Funds: – All the Investments under a provident fund are exempted from tax under section the 80C if the Income Tax Act. You also have the option to contribute voluntarily through VPF, which is also tax free. Earnings up to an amount of 1.5 Lakh is exempted from tax under section 80C. However, make sure that you keep your PF passbook updated as the records of the investment are required at the time of filing returns in July.
- Medical Insurance:-
The rising medical care costs have made health insurance an important investment. Health insurance policies ensure that seeking medical help does not exhaust your financial resources. The tax deduction under medical insurance is provided under the section 80D. By producing proof, such as the receipt of medical insurance, you can claim tax benefits of as much as Rs. 15,000 to Rs. 20,000.
- Life Insurance: – Life insurance comes in various forms such as endowment plans, term plans, whole life plans etc. Regardless of the type of life insurance plan, tax-savings are assured. Life insurance policies such as Aegon iReturn or iMax are excellent tax saving instruments. The premiums paid toward a life insurance policy is eligible for tax benefits under section 80C of the Income Tax Act. Maximum deduction that can be claimed under life insurance Rs 1.5 lakhs.
- Donating for a social cause: – Donations for charitable purposes are exempted from income tax if made to an organization recognized by the government of India. The Income tax department issues a registration number to charitable organizations for receiving donations under section 80G of the Income tax Act. Donations to some organizations are exempted from tax up to 100% and some are exempted up to 50%. However, to claim the tax benefit while filing, you need to produce the receipt with the registration number mentioned in it.
- Investing in ELSS: – ELSS stands for Equity Linked Saving Scheme. ELSS is perhaps the most popular Sec 80C investments. Under ELSS, investors can enjoy the benefits of capital appreciation, as well as tax benefits. The investments made under this scheme is eligible for tax exemption, of up to a limit of Rs. 1.5 lakh.
Want to know your taxes? Access our easy to use tax calculator, and plan your finances.