Saving is a big deal, especially when the factor of taxes moves around. We all look around for teeny-tiny ways we can save up some money. And that is quite reasonable, given the fact that a hard 8 hours plus a load of overtime is consumed on earning that money. Income tax can be one of the hardest things to understand, but that is surely not the case if you are determined on saving up. It is big-time one should look less into discounts around the corner and find more ways to make investments more worthwhile. Now that you are here, asking for that answer, you are on your way to a much better financial outlook.
“I think if I were a superhero saving the world, I’d expect at least not to have to pay income taxes. I mean, there should be something in it for a hero who risks his life to save mankind every day.”
Obviously, there has got to be something in it for the superhero who saves the world, and that would be ‘no taxes’ because he is doing something none of us are, and he should be getting a perk that none of us get. Jokes apart, the deduction under Section 80C can play by your side in saving taxes on investments. Want to know why? Here is the answer to it.
Part 80C is a popular and favorite section among taxpayers because it allows them to lower their taxable income by making tax-saving investments or incurring qualified costs. It enables a maximum deduction of Rs 1.5 lakh from the taxpayer’s total income per year. So, you have just read about Section 80C and are already in love with it, aren’t you?
Tax-saving FDs are similar to normal fixed deposits, except they have a 5-year lock-in term and a tax reduction under Section 80C on investments up to Rs 1.5 lakh.
PPFs are long-term investments backed by the Indian government. Deposits made into a PPF account are tax-deductible under Section 80C.
The National Pension Program (NPS) is a pension scheme established by the Indian government to provide a pension to the unorganized sector and working professionals upon retirement. Section 80C allows for tax deductions on investments of up to Rs 1.5 lakh.
Sukanya Samriddhi Yojana/Scheme is one of the Government of India’s most popular initiatives. The project aims to improve the lives of girls in the country.
ULIPs combine insurance and investment. A portion of the money invested in ULIPs is used to provide insurance, while the remainder is invested in the stock market. Section 80C allows for tax advantages on ULIP investments of up to Rs 1.5 lakh.
EPF is a retirement benefit plan open to all salaried employees. This is equivalent to 12% of basic salary + DA deducted by an employer and placed in the EPF or other recognized provident funds.
Equities Linked Savings Schemes are mutual funds that invest a significant portion of their assets in equity. Furthermore, the fund has a three-year obligatory lock-in period. It is the shortest of any investment product. Investment in ELSS funds is deductible under section 80C of the Income Tax Act, up to a maximum of Rs. 1.5 lakh.
Aside from the 80C deductions, there are more Section 80 deductions available to help you save money on taxes. Tax breaks on health insurance premiums and home loan interest are just a few examples.
– Senior Citizen Medical Insurance: A medical insurance premium of Rs. 50,000 has to be claimed. (Rs 25000 for self, spouse, and children, and Rs 25000 for dependent parents under the age of 60.) If medical insurance is purchased for senior citizens, the premium is paid up to a maximum of Rs 1,000,000 each year. If senior citizens do not have health insurance, they can claim medical expenses up to Rs 50,000 under section 80D.
– Charity: Section 80G allows you to deduct any charitable contributions you make to notified institutions or funds.
– Interest on Education Loans: Section 80E allows a deduction for student loan interest.
– Interest on Home Loans: Interest paid on a home loan is deductible under section 24 up to Rs 2 lakh. Section 80EE also permits you to claim a deduction of up to Rs 50,000 on home loan interest that exceeds the amount set out in section 24. The eligibility for additional interest of Rs 1.5 lakh on the acquisition of a new house under the affordable housing scheme under Section 80EEA has been extended until March 31, 2022.
One of the best times you can start planning for tax-saving investments would be when the new financial year begins. So, do not sit there procrastinating until a quarter or two is already over. If you wait that long, all you need to make are hurried decisions, which you surely would not want. It will not only save you money at the end of the year, but it will also allow you to make more educated investing decisions. Also, always keep yourself up to date on your tax-saving expenses and choose the investments that would suit all of your financial goals.