The beginning of March rings in alarm amongst taxpayers who haven’t saved enough taxes for the financial year. The tax-saving window ends on 31st March of every fiscal year. If your employer has deducted higher TDS for not submitting tax-saving investment proofs, then you can claim ITR refund while filing returns.
The following are some of the ways you can reduce your taxable income for FY 2019-20:
1) Invest in Government Schemes:
If you are salaried and have not made enough contributions towards Employees’ Provident Fund (EPF), then you can consider investing in government offered schemes such as Public Provident Fund (PPF), National Savings Certificate (NSC), and National Pension Scheme (NPS). These investments will accumulate a significant corpus over time and will be of great use in future.
2) Avail Health Insurance
This should have been done even if it were not to offer tax deductions. It is imperative to cover yourself and all dependent family members under a health insurance plan with sufficient coverage, this will keep you away from a financial crisis at times of medical emergency. The extent of deductions on premiums paid towards health insurance is as given below:
|Scenario||Premium paid||Deduction under 80D (Rs)|
|Self, family, children (Rs)||Parents (Rs)|
|Individual and parents below the age of 60 years||25,000||25,000||50,000|
|Individual and family below the age of 60 years but parents above the age of 60 years||25,000||50,000||75,000|
|Both individuals, family and parents above the age of 60 years||50,000||50,000||1,00,000|
3) Invest in Sukany Samriddhi Yojana (SSY)
If you are a parent of a girl child under the age of 10 years, then it would be best if you open an SSY account in your daughter’s name. You can invest up to Rs 1,50,000 a year and earn an attractive interest rate (it is currently 8.5%). It is advisable to continue investing in SSY despite opting to follow the new tax regime as it would be beneficial to plan your daughter’s future better.
Also Read: How can your employer help you save taxes?
4) Invest in ELSS
Investing in Equity-Linked Savings Scheme (ELSS) is one of the best ways to save taxes. It is an equity-oriented mutual fund scheme which offers the dual benefit of tax deductions and wealth accumulation over time. Also, it has the potential to provide the highest returns among all Section 80C tax-saving investment options and comes with a lock-in period of just three years, the shortest among all Section 80C options.
There is no need to panic if you missed the deadline to submit investment proofs to the employer as you can claim a refund while filing your ITR returns. However, it is the best practice to submit investment proofs on time and avoid higher TDS being cut from your salary.
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Engineer by qualification, financial writer by choice. I am always open to learning new things.