Tax Saving options for A.Y.2022-23.We all want to save as much money as we can within the law.
All of us should always pay our income tax because it builds the nation and strengthens the-
economy. But, wise, planned and strategic investment can help us save some money to pave the
-way for a financially secure future. Here are some top options that every taxpayer should explore-
to save their income tax.
Five tax saving options
under section 80C
To encourage savings,
the Government of India offers tax breaks if you invest in certain financial
instruments each year. The amounts invested in these classified instruments are
deductible from your taxable income.
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Section 80C is one of
the most popular tax-saving options among income taxpayers and offers a variety
of ways to invest money and save tax every year. The annual limit for claiming
tax deduction is currently set at Rs 1.5 lakh. The following devices are widely
popular because of the specific benefits of each:
1. Public Provident Fund
The current interest
rate is 7.1% and this is a safe option if you are looking for a risk-free,
stable return in the long run. The minimum validity of PPF accounts opened at
selected bank branches and post offices is 15 years and can be extended up to 5
years block.
The amount deposited in
the PPF account is deductible from taxable income under section 80C, although
partial withdrawals are only allowed from the 7th year. It is mandatory to
deposit a minimum of Rs.500 per annum to keep the account active.
2. National Pension
Scheme (NPS)
NPS is a voluntary
pension scheme that is tax-exempt at both maturity and annuity (up to 40%).
Contributions to NPS are also deductible from taxable income under section 80C.
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3. Life insurance plan
If you are looking for
a healthy investment then the most powerful and difficult instrument. Use it if
you are looking for inflation-beating returns, wealth creation and financial
security for your family. No material other than the tax benefit under section
80C provides financial protection for your family.
Canara HSBC Oriental
Bank of Commerce Life Insurance offers some savings plans and even guaranteed
returns to give you peace of mind. In the case of premature death, future
premiums are paid by the company (for certain policies) so that the family's
lifestyle and education aspirations are not affected.
In addition to
investing in National Pension Scheme under Section 80C, there is now an extra
opportunity to claim an additional exemption of up to Rupees Fifty Thousand
under Section 80CCD (1B). If you have invested Rs 1.5 lakh in life General
Provident Fund or Public Provident Fune, you can invest another Rupees Fifty
Thousand in National Pension Fund and deduct a total of Rupees Two lakh from
your taxable income.
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4. Mediclaim under
Section 80D
Health insurance not
only protects you from the cost of hospitalization but also saves taxes on
premiums paid. This dual benefit is because the premiums paid can be deducted
under Section 80D of the Indian Income Tax Act. What's more, you can even
include premiums paid for your family and dependent parents.
Up to Rs 25,000 can be deducted from taxable income for health insurance cover for you, your spouse and your dependent children. Also, you are entitled to claim an additional deduction of Rs 25,000 paid for health insurance if your parents are under 60 years of age.
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There is also an
incentive to do preventive health check-ups. It has cost Rs 5,000 to get a
health check for you, or your family is also eligible to be deducted under
Section 80D though under the overall limit.
5. Home Loan - Section
24B
Buying a home with a
home loan is not just about building your home or fulfilling your family's
dreams. Not only will you save money on constantly rising rents, but you can
also save some money that would otherwise have been paid as taxes.
A) Home Loan Principal:
Home loan EMI has two components- principal and interest. The principal
component that is paid each year is deductible from your taxable income under
section 80C and within the total limit of Rs 1.5 lakh under section 80C.
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b) Interest on home loan:
If the property is self-acquired, interest up to a maximum of Rs. 2 lakhs
is also deductible from the taxable income under section 24B.
C) Registry and other charges:
Whenever you register your property, you are also eligible to claim a
deduction of stamp duty and the amount paid for registration.
With so many ways to
invest and save tax, you must look for the benefits and returns of each before
zeroing in on the right one for you. Even with the above options, you can claim
a discount of up to Rs 5 lakh from your taxable income. If you fall into the
30% tax bracket, you can save a whopping Rs 1.5 lakh with just the above
options!
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2) This
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3)
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