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Complete List of Tax-Saving Schemes as the Current Financial Year Comes to a Conclusion



Complete List of Tax Saving Schemes as the Current Financial Year Comes to a Conclusion

Employers may have already withheld taxes in January and February for the majority of salaried workers.

The Income Tax Act, which can drastically lower tax obligations and raise savings, is one of the many opportunities for savings and expenses that the Indian government provides for those who still need to make investments.

One of the most significant aspects of financial planning strategy and management is tax-saving scheme investing. Through maximizing tax benefits and raising disposable income, it can assist people in reaching their financial objectives.

To reduce taxes and boost savings in the upcoming fiscal year, take a look at these tax-saving investment options before March 31st.

  1. Home loans:

Under Section 80C and Section 24(b) of the Income Tax Act, one can take advantage of tax benefits on home loans, which allow one to save taxes on both the principal repayment amount and interest paid.

Under Section 80C, individuals are eligible for tax deductions up to Rs 1.5 lakh for principal repayments on home loans, and under Section 24(b), they are even exempt from paying home loan interest up to Rs 2 lakh annually.

Additionally, one may be able to avoid paying the interest component of income tax calculations altogether by renting out their recently acquired house. If a person is a first-time homeowner, they are eligible to receive an additional annual tax liability reduction under Section 80EEA.

  1. Health insurance or Mediclaim:

Up to the agreed-upon amount, health insurance, also known as Mediclaim, is recognized for covering costs both before and after an accident or hospital stay. For the part of their yearly taxable income that is used for premium payments, individuals are eligible to receive tax benefits under Section 80D. However, the amount free from income tax is contingent upon the insured person’s age; insurance premiums can total up to Rs 20,000 for senior citizens and up to Rs 15,000 for others.

  1. Tax-loss harvesting:

By offsetting capital gains with capital losses, new investors can minimize their tax liability under the Income Tax Act of 1961 through a technique known as tax-loss harvesting. This strategy involves selling underperforming investments to realize losses, which can be used to offset taxable capital gains from other investments. Long-term capital gains up to Rs 1 lakh are tax-free.

  1. Government schemes:

High returns on investments and tax exemptions are provided by several government-mandated investment schemes, which enable people to claim up to Rs. 1.5 lakh against their total yearly income under Section 80C of the Income Tax Act.

To receive tax exemptions, people can purchase a variety of instruments, including:

  • Senior Citizen Savings Scheme (SCSS)
  • Sukanya Samriddhi Yojana (SSY)
  • National Pension Scheme (NPS)
  • Public Provident Fund (PPF)
  • National Pension Scheme (NPS)
  1. Life Insurance:

The Income Tax Act’s Section 80C permits tax deductions for premium payments made for life insurance policies. The insurance policy’s maturity proceeds or death benefits are tax-free under Section 10(10D).

To be eligible for Section 80C deductions up to Rs 1.5 lakh, policies issued after April 1, 2012, must have an annual premium that is less than 10% of the sum assured. To qualify for the same deduction for policies issued before April 1, 2012, the premium must be no more than 20% of the total amount assured.

Furthermore, tax exemptions up to Rs 1.5 lakh are offered by Section 80CCC for the acquisition, renewal, or annuity payments of life insurance policies made through monthly salary.

  1. Tax-saving Mutual Funds:

Up to Rs 1.5 lakh, individuals can use mutual funds, also known as equity-linked savings schemes (ELSS), to save taxes under Section 80C of the Income Tax Act. In addition, Section 10(D) exempts the proceeds from maturity or death from tax. These funds, which have a three-year lock-in period, are suitable for investors with a moderate to high-risk tolerance because they primarily invest in equities.

  1. Unit-Linked Insurance Plan (ULIP):

Under sections 80C and 10(10D) of the Income Tax Act of 1961, ULIPs provide investors with a long-term investment opportunity. They give investors the option to select between equity and debt funds, or a combination of both.

  1. National Savings Certificate (NSC):

A government savings bond program called National Savings Certificates was created to encourage investors with modest to moderate incomes to save money while taking advantage of Section 80C tax benefits.

  1. Tax Saver Fixed Deposit:

You can deduct up to Rs. 1.5 lakh from your taxes by investing in tax-saving fixed deposits under Section 80C of the Income Tax Act, 1961. These fixed deposits have a five-year lock-in period that is required, and the interest that is earned—which can range from 5.5% to 7.75%—is taxable.

Investing in tax-saving options is a great way for people to increase their savings and reduce their tax obligations. Selecting the investment plan that best fits your risk tolerance and financial objectives is crucial, as there are many options available under Section 80C of the Income Tax Act.

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