Tax Saving Schemes: Every earning professional wants to find a strategy to reduce their overall tax payments in order to reduce the financial stress that taxes frequently cause. In order to claim deductions, the majority of taxpayers typically invest in tax-saving choices. However, if lowering tax burden is your ultimate goal, selecting the solutions that offer the best tax benefits is crucial. In addition to the well-known Section 80 tax savings possibilities, you can save even more tax by investing in your parents’ names.
Tax Savings with Health and Life Insurance
You can take advantage of tax benefits under Section 80D of the Income Tax Act of 1961 by purchasing a health insurance policy. Depending on the policyholder’s age, certain exemptions can be applicable. Senior adults (60 years of age and over) are excused from paying medical insurance premiums up to Rs 50,000, while younger people can get a rebate of up to Rs 25,000. Consequently, purchasing a health insurance policy for your family’s older members would assist you avoid paying greater taxes. Additionally, you can purchase a life insurance policy to qualify for an exemption under Section 80C of the I-T Act of up to Rs. 1.5 lakh.
Tax-Efficient and Risk-Free Investment Options
Government programmes are risk-free, but some of them are also tax-free, so investing in them might save you a lot of money in taxes. Investments in the Senior Citizen Savings Scheme (SCSS), National Pension Scheme (NPS), Public Provident Fund (PPF), and Sukanya Samriddhi Yojana (SSY) are eligible for income tax benefits. Additionally, some government programmes give significant returns as well, which can be a bonus.
Leveraging ELSS Mutual Funds for Deductions
The only mutual funds that provide tax deductions are equity-linked savings scheme (ELSS) funds, therefore setting up a SIP to invest in ELSS could assist reduce taxes. Section 80C of the I-T Act permits tax deductions on ELSS investments up to Rs 1.5 lakh per year.
Reducing Tax Liability through Investments in Parents’ Names
You can reduce your tax liability under the “Income from Other Sources” section of Section 56 of the Internal Revenue Code by investing in your parents’ names. You might save up to Rs 5 lakh in taxes if your parents are taxed at a lower rate or none at all.
Charitable Contributions and Section 80G
Under Section 80G of the I-T Act, you can deduct your charitable contributions from your income. In some circumstances, you may also be eligible for a 100% donation refund.