We all start to sweat at the mention of taxes! Taxation is quite an insightful subject as several people feel the pain while paying taxes. Each one of us wonders how to save income tax, as parting with an extensive amount of your hard-earned greens can be a very painful experience.
However, the sad part is that no one can flee from the hands of taxes and it is mandatory for all the citizens of India.
How to Save Tax?
Well, to ease all your worries, the government of India has issued several laws that answer your questions on how to save tax. Several Indians are not aware of the options available to save money and tax legally and might end up opting for various illegal means.
Below is a list of a few tips to save money from taxes in India:
1. How to Save Tax by Investing in Provident Funds?
Provident fund is best suited for the ones who tend to stay away from financial risk factors. It is quite easy to open your PF account due to the availability of the web or through the bank as well. You can also transfer your funds online through your linked bank account easily.
The investment that comes under the Provident Fund is said to be exempted from tax and this comes under section 80c of the Income Tax Act. Here, you are also provided with an option to contribute individually by using VPF, this is completely free from any taxes. Also, earnings up to 1.5 Lakh are excluded from tax under the section stated above. All you need to do is to make sure that you are maintaining your PF Passbook regularly.
How much money can you save? Well, right from the next financial year, the NPS (National Pension Scheme) will provide you with an additional tax exemption of amount Rs.50, 000. Whereas, opening a PF account still entails several paperwork along with visits to your bank.
2. How to Save Tax by Investing in Online Term Policies?
The term insurance provides you with a large cover at a very low cost. There are several term plans available online that are more affordable than other physical term policies and products available in the market. Well, the process of buying a term policy is very simple and it only requires about an hour.
How much money can you save? Well, by investing in various term policies available online- you will get tax exemptions up to Rs. 1.5 Lakh under the Income Tax section 80C
3. How to Save Tax by Investing in Medical Insurance?
As we all know, the rising medical expenses have made it a necessity to invest in a reliable health insurance policy. Health insurance policies make sure that you do not exhaust all of your financial resources when seeking medical help. Plus, you get tax exemption for investing in medical insurance under the section 80D.
Some companies tend to facilitate the purchase of a health insurance policy through online submission of the form. Some cases do not require pre-policy medical checkups and can easily be bought in about an hour through the company’s website. So, here maintaining proof, like your receipts related to medical insurance is very important. Always remember some insurance policies won’t be able to cover the full cost of a particular procedure or medicine, therefore you’ll always be wise to remember you could be the recipient of a subrogation letter.
How much money can you save? It is best to buy a health insurance policy to ensure that the process involved during the purchase ends before the 31st of March. This is because; those who are over the age of 45 will be asked to wait till the policy is processed and issued. Here, you can save up to Rs. 15,000 from your tax under the section 80D
4. How to Save Tax by Donating an Amount to a Social Cause?
Charity donations are completely exempted from income tax. This can only come to reality if the donation is made to a recognized institution by the government of India. Also, the Department of Income Tax then issues a registration number for the organizations that will be receiving the donations under the section of 80G.
How much money can you save? Donations to a charitable organization help you save tax up to 100%, whereas some organizations can help tax exemption up to 50%. But, to claim the tax benefit during the process of filing you need to maintain the receipts and other related documents like the registration number as mentioned above.
5. How to Save Tax by Investing in Various Tax Saving Deposits?
Well, the tax saver products are quite popular instruments available in the market. These are quite simple products to invest in – as you only have to register yourself using internet banking. You have to open a 5-year tax-saver deposit by depositing or transferring a small amount from your savings account. The deposit receipt will be mailed to your account and will also serve as proof when claiming tax benefits.
Also Read: 7 Easy Ways to Make Money Online
Conclusion
The laws of Indian Tax are quite simple and very easy to understand. Therefore, by using these various requirements of the Income Tax Act; one can save a large amount of money from taxes.
