Eligible citizens of India need to pay income tax and other applicable taxes as per the law; however, income tax does eat into one’s income. Thus, tax planning is imperative not just to save on taxes and maximise income but also to secure your financial future by purchasing and maintaining tax saving investments. In fact, the Income Tax Act, 1961 provides several deductions for different eligible investments, insurance plans and expenditures made by taxpayers in a given financial year.
This article will delve into the various such tax saving investment avenues that could tick all the above-mentioned boxes. So, let’s begin!
The most popular tax saving investment options for individuals and Hindu Undivided Families (HUFs) fall under section 80C of the Income Tax Act, 1961. Under this section, taxpayers can claim a maximum deduction benefit of Rs. 1.5 lakh in a financial year by making tax-saving investments or through certain other eligible expenses.
Highlighted below are some tax-saver investments that allow such deductions:
Now let us take a closer look at these schemes.
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Alongside deductions under section 80C, there are several deductions that taxpayers can use to save on income tax, such as:
The most popular tax-saving options that an individual can avail of under Section 80C of the Income Tax Act, Section 80C include various investments and expenses, where one can claim deductions up to a limit of Rs. 1.5 lakh in a financial year.
The ideal time to plan your tax savings schemes is the beginning of a financial year. When you plan at the start of a financial year, the investment may compound, which will allow you to achieve your long-term goals. That said, bear in mind that tax-saving should ideally be viewed as an added perk and never a financial goal in itself. Also, you’ll be well-advised to avoid taking last-minute tax-saving steps to prevent committing mistakes.
So, we suggest that you employ the following points to plan tax-saving for the upcoming financial year:
The following are the payments applicable for deduction under section 80C:
Now, let us discuss a few useful tips to save on income tax:
There is an array of tax saving investment options for the taxpaying citizens of India. So, if you are planning to invest in tax saver schemes, we suggest that you consider opting for the ones discussed above. That said, it is imperative to take your financial goals and risk profile into account before investing in any of these avenues.
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Ans: Indian citizens aged below 60 years with an annual income exceeding Rs. 2.5 lakh are liable to pay income tax under the new tax regime. Under this, individuals aged above 60 years with an income of over Rs. 3 lakh are also liable to pay this tax.
Ans: Income tax is calculated based on an individual’s applicable tax slab.
Ans: A maximum penalty of Rs. 5,000 can be levied for not filing FY2020-21 ITR by 31 December 2021.
Ans: The 80C limit is Rs.1.5 lakh.
Ans: Yes. The interest income is taxable according to the taxpayer’s applicable slab rate. However, the TDS can be avoided by submitting Form 15G (or Form 15H, for senior citizens) subject to terms and conditions.
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Disclaimer: Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
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