Income Tax News: Tax season can be a stressful time for many individuals, as they navigate the complex world of deductions, credits, and exemptions. However, there are a number of strategies that you can employ to reduce your tax burden and save money. Here are some of the top tax-saving strategies for every earning individual
Leverage Insurance Premiums for Tax Deductions
Purchasing health insurance for yourself and your family members can provide valuable tax benefits. Under Section 80D of the Income Tax Act, 1961, you can claim tax deductions on health insurance premiums. The deduction amount varies depending on the age of the policyholder. For younger individuals, the maximum deduction is Rs 25,000, while senior citizens (aged 60 and above) can claim a deduction of up to Rs 50,000. Additionally, you can claim a deduction of up to Rs 1.5 lakh under Section 80C of the I-T Act for purchasing a life insurance policy.
Embrace Government Schemes for Tax-Free Savings
Government schemes offer a safe and secure option for investment, and some of them are also tax-free. Investing in these schemes can help you save a significant amount of tax. Some popular tax-free government schemes include:
- Senior Citizen Savings Scheme (SCSS)
- National Pension Scheme (NPS)
- Public Provident Fund (PPF)
- Sukanya Samriddhi Yojana (SSY)
In addition to tax benefits, these schemes offer attractive returns, making them an excellent choice for long-term investment.
Invest in Equity-Linked Savings Scheme (ELSS) SIPs
Equity-linked Savings Scheme (ELSS) mutual funds are a unique type of mutual fund that offers both tax deductions and market-linked returns. By investing in ELSS through Systematic Investment Plans (SIPs), you can benefit from regular investing and tax benefits. Under Section 80C of the I-T Act, you can claim tax deductions of up to Rs 1.5 lakh on your annual ELSS investments.
Explore Investments in Your Parents’ Names
Investing in the name of your parents can be an effective tax-saving strategy, especially if they fall into a lower tax bracket or the nil bracket. Under Section 56 of the I-T Act, income earned from investments made in the name of your parents is considered income from other sources. This means that the income is taxed at a lower rate compared to your own income and this approach can result in substantial tax savings, potentially up to Rs 5 lakh.
Support Charitable Causes and Reap Tax Benefits
Contributing to charitable causes can not only make a positive impact on society but also provide tax benefits. Under Section 80G of the I-T Act, you can claim a deduction on donations made to approved charities. In some cases, you may even be eligible for a 100% rebate on the donated amount.
By implementing these tax-saving strategies, you can effectively reduce your tax burden and keep more of your hard-earned money. Remember to consult with a tax advisor to determine the most suitable strategies for your specific financial situation.
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