Salaried people often think they have less scope for saving tax. But the various allowances and reimbursements that they receive as a part of their salary provide an opportunity to save tax.
Tax planning should not be done in an isolation zone. A person should align the larger investment plan with tax saving tools to maximize returns. It is advisable that tax saving be done at the beginning of the financial year, else one may not be able to avail the right benefits. Saving on your taxes surely helps you keep your finances stable and divert the funds for other investment tools.
Under section 80C of the Income Tax Act, 1961 there is a total exemption of Rs 1.5 lakh that could be saved from getting taxed by the government. This benefit is available to everyone, irrespective of his or her income levels.
Some of the investment tools that could be your best tax saving instruments under section 80C of Income Tax Act, 1961 are Public Provident Fund, Life Insurance schemes like ULIPs, child plans, retirement plan, investment-insurance plans, Mutual Funds, etc. Even deduction towards repayment of principal on housing loan can be considered under this category as it comes out of the investment in a house property.
Insurance plans are popular tax saving tool considered by most Indians. Infact, many youngsters buy insurance only to save taxes incurred on their incomes. An insurance policy not only provides suitable cover for your dependents but also helps in building your suitable tax rebate plan.
Premium paid for insurance plans are exempted from tax up to a maximum of Rs 1.5 lakh under section 80C of the Income Tax Act, 1961. Also, the claim amount received by the beneficiaries or bonus in the hands of the policyholder is tax free under section 10 (10D) of the Income Tax Act.
*Unit-linked- insurance policies (ULIPs) that provide combined benefits of life cover as well as investment earnings can help you save taxes up to Rs 1.5 lakh for premiums paid towards these plans.
*For retirement plans, section 80CCC of the Income Tax Act, 1961 provides an exemption of up to a maximum of Rs 1.5 lakh for premiums paid towards pension plans.
Best Tax Saving Plan helps you attain your goal of wealth accumulation. It offers you a financial freedom to fulfill your dreams in life. A little bit of attention along with recommendations from financial experts will clear off the road block in the efforts andwill give you fruitful dividends on tax saving tools.