The revenue from these taxes, including property tax, is crucial for the country's smooth operation, as the government uses these funds to promote economic growth and development. The tax amount varies based on the respective income according to the tax slab in India.

Income taxpayers are always on the lookout for opportunities to save tax and reduce their overall tax liability.

Many individuals seek tax-saving investment options and ways to save income tax in India as the ITR filing deadline approaches. This is understandable, as no one wants to miss out on legitimate income tax saving options that can reduce their tax payments. There are numerous legal ways to save tax under the Income Tax Act of 1961, including tax-saving mutual funds, NPS, insurance premiums, medical insurance, home loans, and others.

Regardless of whether you are a salaried individual, a freelancer, a business owner, or earn income from your investments, you are required to pay taxes to the government as per the Income Tax Act within the specified timeframe.

List of Tax-Saving Options for Different Sections

Section 80C

• Section 80C is a popular and significant tax-saving provision for individuals and Hindu Undivided Families (HUFs) in India. It offers deductions for a variety of investments and expenses, up to a maximum limit of Rs. 1.5 lakh per financial year.

• The objective of Section 80C is to promote savings and investments by exempting from tax any interest paid or received on money lent to individuals in India. Additionally, this section allows a deduction at source for an amount equivalent to 10% of the total interest payable under section 8 of the Income Tax Act 1961.

• Section 80 of the Act outlines the conditions under which interest can be deducted at source. Once these criteria are fulfilled, you can claim a deduction of up to 10%. If you are paying interest on loans provided to Indian resident borrowers, you can claim this deduction at source.

Equity Linked Savings Scheme (ELSS)

• ELSS is a type of mutual fund with a 3-year lock-in period. ELSS is the only mutual fund category in India that qualifies for a tax deduction under Section 80C of the Income Tax Act

• ELSS funds typically offer higher returns compared to other tax-saving schemes due to their investment in equity markets. Investors have the flexibility to invest either in a lump sum or via a Systematic Investment Plan (SIP). However, it is crucial to remember that funds cannot be withdrawn prematurely before the 3-year lock-in period ends.

• It is important to consider the risk associated with ELSS, as investments are made in the stock market. While there is a risk of volatility, long-term consistency can lead to significant rewards.

Public Provident Fund (PPF)

• The Public Provident Fund is a long-term government-backed savings scheme with a maturity period of 15 years. It is a popular income tax saving option available at most banks and post offices in India. The interest rates for PPF are adjusted quarterly. According to the latest updates, the current interest rate on PPF is 7.1%.

• The interest earned on PPF is tax-exempt. Individuals can start a PPF account with a minimum investment of Rs. 500, and the maximum investment limit per financial year is Rs. 1.5 lakh.

National Savings Certificate (NSC)

• The National Savings Certificate is another notable income tax saving scheme that offers a fixed interest rate of 7.7% per annum and has a tenure of 5 years.

• The interest earned on NSC is eligible for tax savings, with up to Rs. 1.5 lakh claimable as a deduction under Section 80C.

Tax-Saver FDs

• Tax-saving FDs are also an effective way to save taxes. Investors can avail of a tax deduction of up to Rs. 1.5 lakh under 5-year tax-saver FDs. However, these FDs come with a fixed interest rate, currently between 7-8%, and the interest earned is taxable based on the investor’s tax bracket.

Senior Citizens Savings Scheme (SCSS)

• The Senior Citizens Savings Scheme is a government-backed long-term income tax saving option with a tenure of 5 years, available to individuals above 60. It offers an interest rate of 8.2% (taxable). Under this scheme, one can claim a tax deduction of up to Rs. 1.5 lakh.

Sukanya Samriddhi Yojana (SSY)

• The Sukanya Samriddhi Yojana is beneficial for parents with a girl child below 10 years. Investments made towards this scheme are eligible for a tax deduction of up to Rs. 1.5 lakh under Section 80C. The account has a tenure of 21 years or until the girl's marriage after she turns 18.

• The current interest rate for this scheme is 8.00%, and the interest earned is tax-free.

Employee Provident Fund (EPF)

• The Employee Provident Fund is a retirement benefits scheme primarily for salaried employees. Under the EPF Act, employers deduct 12% of the basic salary and Dearness Allowance (DA), which is then deposited into government-recognized provident fund schemes.

• EPF is one of the common tax-saving schemes, with the deduction contributing towards the Rs. 1.5 lakh limit under Section 80C.

Home Loan Repayment

• Individuals who have taken a home loan can claim tax deductions under Section 80C for the portion of the EMI used to repay the principal amount. However, the interest component of the EMI does not qualify for tax deductions.

Tuition Fees

• This income tax saving benefit is available exclusively to individual parents or guardians with up to two children per individual. Tax deductions of up to Rs. 1.5 lakh can be claimed for tuition fees paid for a child’s education. The deduction is not dependent on the child’s class but is applicable only if the education course is full-time and conducted by an Indian school, college, or university.

• The benefits of this scheme can be claimed by parents who have adopted children, are unmarried individuals, or are divorced parents.

A Few Tips - How To Save Taxes in India

• When considering reducing taxable income, several key sections under the Income Tax Act offer tax-saving opportunities. These include Sections 80C, 80CCC, 80CCD, 80D, 80DD, 80DDB, 80CCG, and 80G.

• Listed below are the sections and their respective exemption limits. For salaried individuals, taking advantage of these sections can be particularly beneficial.

• However, it's important to note that while these exemptions can help, they may not cover all your basic needs and expenses.

• Understanding these allowances and exemptions is crucial when planning your finances.

There are numerous tips for saving taxes in India.

• One tip is to avoid purchasing gold and other precious metals, as they are taxed at a high rate and do not generate significant income.

• Another tax-saving strategy is to ensure you possess a valid PAN card. Obtaining a PAN card is straightforward, but it should be done correctly. You should contact the Income Tax Department directly for assistance.

• You can also save money by utilizing your deductions effectively and claiming them on your tax returns. For instance, if you paid for your child’s education, you should claim this expense as a tax deduction.

Tax Saving Options Other than Section 80C

• How to save income tax beyond Section 80C is a common question that taxpayers often seek answers to. There are various deductions available under Section 80, apart from 80C, that can be utilized to reduce income tax liability. For example, tax benefits on health insurance premiums and home loan interest are significant examples.

Listed below are such provisions:

• You can claim a deduction of up to Rs. 25,000 (Rs. 50,000 for Senior Citizens) for medical insurance premiums.

• A deduction of up to Rs. 50,000 can be claimed on home loan interest under Section 80EE.

• Contributions to the National Pension System (NPS) can qualify for a tax deduction of up to Rs. 1.5 lakh under Section 80CCD.

• Under Section 80E, you can claim a deduction on interest paid for education loans.

• Charitable donations to specified institutions or funds can be deducted under Section 80G.

• Capital gains can be exempted under Sections 54-54F.

• Interest deduction for a vehicle loan used to purchase an electric vehicle can be claimed under Section 80 EEB.

• A deduction of up to Rs. 10,000 for interest earned on a savings bank account is available under Section 80TTA.

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