Income Tax, the two words that make every salaried individual groan. Every year, when the filing season rolls in, people start scrambling to find good ways to make sure that they pay lesser taxes. With just a few informed decisions on your part, Tax Saving can be a breeze.
The government isn’t as heartless about income tax as most taxpayers might think. It has made sure that there are plenty of ways for a salaried individual to save his/her hard earned money. Under Section 80 of the Income Tax Act of 1961, there are quite a few ways for you to save taxes.
We have listed out some of the most popular Tax Saving Avenues:
Equity Linked Saving Scheme (ELSS): Under Section 80C, you are entitled to invest in certain mutual funds that have been classified as Tax Saver Funds. These funds are known for their higher growth potential of investment and a short lock-in period of 3 years. Historically ELSS funds have given returns between 12% – 18%.
Fixed Deposit (FD): FDs are another classic go-to option under Section 80C. It lists as one of the most secure investments you can make since the returns aren’t tied to the market and therefore assured to grow your wealth. The only downside of Fixed Deposits is the lock-in period; you will not have any access to the investment for a period of 5 years.
Public Provident Fund (PPF): PPFs rank right at the top with ELSS and FDs as one of the Tax Saving option under Section 80C. With PPF you can start the investment as low as Rs 500 and as high as Rs 1.5 lakhs. However, it has a rather long lock-in period of 15 years, which might be a drawback for those looking for financial liquidity.
National Pension Scheme (NPS): NPS is a government-run initiative to encourage people to start saving up for their retirement. It is a good option for the folks that have a low-risk appetite and are planning an early retirement. NPS gives a return of 8% – 10% which will ensure that you can get a reasonable sum as monthly pension for when you retire.
Health insurance: A deduction of Rs. 25,000 can be claimed for the health insurance you’ve taken out for yourself, your spouse and dependent children. Additionally, a deduction of Rs 25,000 is applicable for any insurance policy taken out on behalf of your parents [if they are under the age of 60] or Rs 50,000 if they are more than 60 years old.
These are just a few of the popular options under Section 80C through which you can cut down on your payable Income Tax. Not only can you save on your payable taxes, but these investment options can also grow your wealth too. So stay woke!