If you are a novice to the tax system and have recently started working, this article will get you covered on tips to save tax. It gets you covered on how to reduce taxable income and the various options available for this. You can check out deductions under section 80C and section 80D. 80C section deductions are the most popular and help you save money on tax.
Ways To Save Money On Tax
Some options to opt for under 80C to deduct tax and save money are as follows:
1. Tuition Fees
Under section 80C, the tuition fees that you pay for your children are eligible for a tax deduction.
2. Home Loan Repayment
If you have purchased a home recently and have taken it on a home loan and are paying regular EMI’s, the EMI dues are eligible for deduction under section 80C.
3. ELSS
ELSS (Equity Linked Savings Scheme) is a mutual fund where money is invested in equities. ELSS comes with a three-year lock-in period and provides high returns. ELSS investments are eligible for tax deduction under section 80C and are eligible for tax deduction up to an amount of Rs 1.5 lacs.
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4. Tax-Saving 5 Year FD
The money invested in 5-year tax-saving FD gets locked for 5 years and withdrawals are not permitted. By making this investment you can save money on tax under section 80C. Interest earned from this 5-year tax saving FD is also exempted from tax and this, in turn, leads to saving your money.
5. PPF (Public Provident Fund)
PPF is a long-term investment with a 15 year long lock period. The interest rate on PPF is decided by the government and is around 7-8% annually. An individual can invest any amount in this scheme and avail of tax benefits under section 80C and also the interest earned on the amount at the end of the term is tax-free. This helps to save money on tax.
6. Life Insurance Premiums
Individuals can also save their money if they avail themselves of a life insurance premium. If you are paying a premium for yourself and your nominees you can benefit under section 80C and save money on tax.
These are a few schemes under which you can save money from tax under section 80C. you can also avail of deductions under 80D for tax savings. Individuals can claim a deduction of about Rs. 25,000 for medical insurance premiums under section 80D. If you and your spouse are senior citizens the amount can go up to Rs. 50,000.
Wrap-Up
Tax planning helps you invest your earnings and money wisely. You must invest in these tax-saving schemes so you can save up your money as far as possible. These come with benefits and lead to financial growth and wise financial planning.
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