Are you looking for tax saving options in India? or Tax saving investment options in India for salaried and non-salaried individual? then you are at right place. According to the constitution, every individual who has an income that falls under a tax bracket is liable to pay taxes accordingly. While people who have had jobs for some time understand the complexities of taxes and ways to save money from it, individuals who have just begun their careers many times end up paying more money as they have no idea on how to avoid taxes. Today we will discuss here some of the important sections under Income Tax Act of India where you can claim tax deduction for a financial year.
Best Tax Saving Options in India – A Beginner’s Guide:
The Government allows tax rebates on many expenses and investments to individuals. Through these tax saving investment options, you can save a significant amount of money that you pay as taxes. Some of these tax saving options in India are:
1. Health Insurance (Section 80D):
The amount paid as premiums towards your health insurance policy is eligible for tax deductions under section 80D. Tax deduction benefit is available for you on the health insurance premiums paid for yourself, spouse and children. Moreover, if you also pay premiums for health insurance for your parents, you can claim a deduction for the same under 80D of Income tax act.
If you do not have health insurance, buying it is a capital idea. It not only helps in reducing your taxable income but also protects you from any medical problems that you may encounter in future. Therefore, compare and purchase a health plan from a leading insurer. Reputable insurers like Future Generali also provide comprehensive critical illness plans which provide a cover for 59 critical illnesses.
2. Life Insurance (Section 80C):
By purchasing life insurance, you not only protect your family from financial troubles in future but also get tax deductions. The amount paid as premiums for life insurance is eligible for tax deductions up to certain limit under Section 80C. The tax deductions, however, are only applicable if the total premium amounts to a maximum of 10 percent of the sum assured.
3. ULIPs (Section 80C & 10 (10D)):
ULIPs or Unit Linked Investment Plans are insurance plans that offer you the option of both wealth creation and life cover. A part of the amount you invest in ULIPs is used for providing you with an insurance cover and the rest goes into various funds according to your choice.
With this option, you can earn the benefits of market gains while protecting your family’s future. Moreover, the premium amount paid in ULIPs is eligible for tax deductions under Section(s) 80C, and the maturity benefit is entirely tax-free under section 10 (10D).
4. Public Provident Fund (Section 80C):
Well, this investment is a no-brainer if you belong to the salaried class. PPF is known to offer security to your savings as it is operated by the government. It helps you in creating a good corpus for your life post-retirement. Moreover, you can claim tax deductions under 80C for the amount invested in PPF of the Income Tax Act.
5. ELSS Plans (Section 80C):
Equity-linked Saving Schemes are a part of mutual fund schemes. Under ELSS, your money is invested in equity funds for high returns. However, with high returns, the risks are also higher in ELSS as it is entirely market-based.
ELSS also help investors in saving taxes money up to limit mentioned under Section 80C. And if you are a beginner with no liabilities, investing in ELSS can be a good option for saving money.
6. Real Estate Investments (Sections 80C, 24 and 80EE):
Buying a house is a dream we all see. But do you know that purchasing a home is one of the safest investment options? Let us tell you how. The principal amount paid for home loans is eligible for tax deductions under Section 80C. In addition, the interest amount paid towards the home loans is eligible for tax deductions up to Rs. 2,00,000 under Section 24 and Section 80EE (Only applicable for loans taken after 1st April 2013).
After reading this article, we’re sure you will be ready to adopt these ways to reduce your tax liability. And as most of these options also increase your wealth while offering future stability, opting them is a wise step to improve your financial position in the long run. To make the right decision, do thorough research of every option or just consult a financial planner.