How to save tax for the F.Y.2021-22. Every
citizen of a country has a responsibility to pay taxes. In the case of
economic, social, infrastructural, political changes, the government collects
taxes directly or indirectly for the welfare of the people. At certain times, a
person may feel that the tax burden on them is too high and they may not be
able to save any of their income due to the extra tax.
In this article, we will discuss some legal ways
to solve this problem so that a person can actually save some part of their
money and not pay it as tax at all. Everyone wants to save tax in one way or
another. Without further ado, let's talk about how to save taxes: -
1. To give alms
The government always encourages individuals
and organizations to make grants and charities. Charity is good for the poor
and good for society. The government has given various benefits and concessions
to those who choose to donate generously and participate in charities.
Grants to the Prime Minister's Relief Fund,
NGOs and political parties can in most cases give you a 100% tax exemption
under Section 80G of the Income Tax Act. Recent amendments to the law include
the Clean India Fund, the National Fund for Drug Abuse Control, and the Clean
Ganga Fund for clearance.
2) Investment in education or learning
In today's world, every parent wants their
children to get the best education and every child wants to succeed in their
education through the best education. With rising inflation, even the cost of
tuition and education is rising. The interest to be paid on education is exempt
from tax.
The deduction is not available on the original payment.
Exemption from education loan exemption under Sec 80E and premium for child
insurance plan exempt from tax under Sec 80C.
3. Invest in market-connected instruments
Income from fixed deposits and recurring
deposits is taxable and honestly, these are old enough as concepts. No one can
invest in FDs or RDs because they do not provide high returns but lock your
money for a long time. Tax-saving investment plans such as ELSS (Equity-Linked
Savings Schemes), PPF (Public Provident Fund) and NPS (National Pension Scheme)
are an intelligent form of tax saving for your investment.
The goal of ELSS is to invest mostly in equity
related instruments and to carry a heavy risk where NPS and PPF are in long
term consideration in most cases. NPS relates to voluntary and long-term investment
plans for retirement where PPF is a savings-tax-tax-saving tool to mobilize
small savings by offering an investment with reasonable returns and tax
benefits. You are exempt from paying tax on ELSS with premiums of less than Rs
1.5 lakh and a lock-in period of three years.
4. Paying a mortgage and paying interest can be
a major form of tax saving for an individual. To get the full benefit of a home
loan, the amount of a home loan has to be huge. For an ongoing home loan, a
waiver may be sought under section 80C on the repayment of the principal
amount. Banks and NBFCOs are offering better deals on home loans and so getting
home loans is becoming relatively better and easier.
5. Insurance policy
The Kovid-1p epidemic is making people more
interested in buying insurance for themselves and their families. It is
important to have insurance in this day and age due to the uncertainty of life.
It is important for everyone to have an insurance policy because of the number
of benefits.
Life insurance can be in many cases such as
Maturity Benefit, Term Plans, Money-Back Policy and ULIP (United Linked
Insurance Plan) plans. The premiums paid for life insurance policies are not
taxable unless they are more than Rs 2,000. 1.5 lakh
The premium paid qualifies for the tax benefit
under section 80s, but the maturity value and death benefit remain tax-free.
ULIPs offered by insurance companies are a single plan that offers investors
both insurance and investment under a single consolidated
plan.
