Tax Saving options for A.Y.2022-23.We all want to save as much money as we can within the law.
All of us should always pay our income tax because it builds the nation and strengthens the-
economy. But, wise, planned and strategic investment can help us save some money to pave the
-way for a financially secure future. Here are some top options that every taxpayer should explore-
to save their income tax.
Five tax saving options under section 80C
To encourage savings, the Government of India offers tax breaks if you invest in certain financial instruments each year. The amounts invested in these classified instruments are deductible from your taxable income.
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Section 80C is one of the most popular tax-saving options among income taxpayers and offers a variety of ways to invest money and save tax every year. The annual limit for claiming tax deduction is currently set at Rs 1.5 lakh. The following devices are widely popular because of the specific benefits of each:
1. Public Provident Fund
The current interest rate is 7.1% and this is a safe option if you are looking for a risk-free, stable return in the long run. The minimum validity of PPF accounts opened at selected bank branches and post offices is 15 years and can be extended up to 5 years block.
The amount deposited in the PPF account is deductible from taxable income under section 80C, although partial withdrawals are only allowed from the 7th year. It is mandatory to deposit a minimum of Rs.500 per annum to keep the account active.
2. National Pension Scheme (NPS)
NPS is a voluntary pension scheme that is tax-exempt at both maturity and annuity (up to 40%). Contributions to NPS are also deductible from taxable income under section 80C.
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3. Life insurance plan
If you are looking for a healthy investment then the most powerful and difficult instrument. Use it if you are looking for inflation-beating returns, wealth creation and financial security for your family. No material other than the tax benefit under section 80C provides financial protection for your family.
Canara HSBC Oriental Bank of Commerce Life Insurance offers some savings plans and even guaranteed returns to give you peace of mind. In the case of premature death, future premiums are paid by the company (for certain policies) so that the family's lifestyle and education aspirations are not affected.
In addition to investing in National Pension Scheme under Section 80C, there is now an extra opportunity to claim an additional exemption of up to Rupees Fifty Thousand under Section 80CCD (1B). If you have invested Rs 1.5 lakh in life General Provident Fund or Public Provident Fune, you can invest another Rupees Fifty Thousand in National Pension Fund and deduct a total of Rupees Two lakh from your taxable income.
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4. Mediclaim under Section 80D
Health insurance not only protects you from the cost of hospitalization but also saves taxes on premiums paid. This dual benefit is because the premiums paid can be deducted under Section 80D of the Indian Income Tax Act. What's more, you can even include premiums paid for your family and dependent parents.
Up to Rs 25,000 can be deducted from taxable income for health insurance cover for you, your spouse and your dependent children. Also, you are entitled to claim an additional deduction of Rs 25,000 paid for health insurance if your parents are under 60 years of age.
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There is also an incentive to do preventive health check-ups. It has cost Rs 5,000 to get a health check for you, or your family is also eligible to be deducted under Section 80D though under the overall limit.
5. Home Loan - Section 24B
Buying a home with a home loan is not just about building your home or fulfilling your family's dreams. Not only will you save money on constantly rising rents, but you can also save some money that would otherwise have been paid as taxes.
A) Home Loan Principal:
Home loan EMI has two components- principal and interest. The principal component that is paid each year is deductible from your taxable income under section 80C and within the total limit of Rs 1.5 lakh under section 80C.
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b) Interest on home loan:
If the property is self-acquired, interest up to a maximum of Rs. 2 lakhs is also deductible from the taxable income under section 24B.
C) Registry and other charges:
Whenever you register your property, you are also eligible to claim a deduction of stamp duty and the amount paid for registration.
With so many ways to invest and save tax, you must look for the benefits and returns of each before zeroing in on the right one for you. Even with the above options, you can claim a discount of up to Rs 5 lakh from your taxable income. If you fall into the 30% tax bracket, you can save a whopping Rs 1.5 lakh with just the above options!
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