How to Save Tax?
When it comes to paying taxes, several people turn agnostic. They feel that it is not fair for the government to grab a large percentage of their hard-earned money. However, taxes are unavoidable and crucial for the development of the nation. Nevertheless, effective tax planning and tax saving financial instruments can help you save a considerable amount on taxes. If wisely done, they can serve a dual purpose of meeting financial goals as well as saving taxes concurrently.
What is tax saving?
You can effortlessly save taxes with adequate tax planning. Tax planning involves arranging your affairs in a certain manner that will help you save taxes. By applying effective tax planning strategies, you can increase your investments substantially. Most taxpayers begin planning taxes at the beginning of the year. There are numerous investment tools available in the market through which one can take full advantage of exemptions, deductions, and rebates permitted under Section 80C to 80U of the Income Tax Act. By doing so, your tax liabilities are reduced to a great extent. Below listed are some of the best investment tools that will assist you in saving taxes:-
· Public Provident Fund (PPF):-
PPFs are a valuable investment option and save tax significantly. PPFs generally provide a return of around 8.8 per cent per year. One can also avail Rs 1 lakh deduction from investments under the Section 80C of the Income Tax Act. Furthermore the maturity proceeds from PPF are tax-free as well.
· Health insurance: -
Health insurance offers tax benefits to individuals up to Rs 20,000 for senior citizens and Rs 15,000 for others, thus proving to be an efficient tax saving investment. Even if your premium is less than Rs 15,000 you can claim a deduction of up to Rs 5,000 on the grounds of preventive health check-ups.
· Life insurance: -
Life insurance is also an efficient tax saving investment option. Life insurance provides various plans like term plan, retirement plans etc. which are viable tax saving options. A Maximum tax deduction of Rs 1.5 lakhs can be claimed for a life insurance policy.