Have an amazing wealth creation journey with proper financial planning, especially tax planning. This tax saver plan can come in handy for your future financial decisions. Read on to know some primary ways to save taxes.
Every fiscal year, the majority of the earning public in India ends up paying a huge chunk of their income as tax due to lack of knowledge or improper financial planning. It’s important to realize that the Income Tax Act permits certain deductions that taxpayers can claim while filing returns. Through specific investments in place, one can save their income tax significantly. So here are some five ways for you to incorporate into your tax saver plan. More such ideas can be found on the tax saver apps as well.
Save for your retirement.
Individuals should never delay when it comes to retirement plans since pension plans can be claimed for deductions under Section 80C. But, one must remember that payouts given in lump sum or the form of annuities are partially or to an extent fully taxable. Traditional retirement plans were more oriented toward savings, but today, pension schemes come with various options. It is suggested to include your retirement planning early on into your tax saver plan to reap its benefits.
You can claim deductions for your income tax on the sum of money you put in a life insurance policy. Under Section 80C of the Income Tax Act, tax deductions on premiums and payouts of life and term insurance policies are permitted. When you pay for premiums of your life insurance, they are tax exempted under the Act, for a total of ₹1.5 lakhs. Section 10 (10D) of the Income Tax Act permits all the payouts generated under a life insurance plan to be exempted from any tax liability. Also, you not only get your tax exempted, but you can also enjoy a stress-free life without worrying about the financial well-being of your family in these uncertain times, tax exemption only being secondary to this.
Opt for an Education Loan
Getting education loans for yourself, your spouse, or for your children’s further education can also be recommended while considering a tax exemption, as education loans can be claimed for tax deduction under section 80E of the Income Tax Act.
Interests on the loan availed can be claimed for tax benefits, and the amount under an exemption that can be claimed is ₹1.5 lakhs and above. There are no maximum limits under Section 80E in which claims for deduction can be filed. Individual tax-paying citizens can claim this benefit. However, Hindu Undivided Families (HUFs) cannot avail such a benefit.
Avail various Market Linked Instruments
The Equity-Linked Saving Schemes or ELSS, National Pension Scheme or NPS, Mutual Funds or MF, and Unit-Linked Incentive Plans or ULIPs are all types of different market-linked instruments. These instruments like ELSS, NPS, ULIPs, and some specific Mutual Funds are exempted for taxation under Section 80C of the Income Tax Act, 1961.
Take Home Loans
You might feel financial planning should not involve taking any kind of loan, but taking a home loan could save your money. Undertaking home loans as part of tax planning can be of great use, as deductions can be claimed under not only one but more than one section of the Income Tax Act. If you have taken a home loan, you can claim tax deductions on the principal amount that you paid under Section 80C. Not only this, but one can also claim deductions on the interest that you pay for a home loan under Section 24.
So, by following these 5 points, one can get better at tax planning and save more in the long run. To know more about such tax saver plans, download the tax saver app and find much such exciting information. Happy investing!