Income tax return: It is always advisable to keep saving even as you earn, month by month. Why? Because, saving helps you in your life plans in future. Yes, it will help finance all your needs and will ensure that you have plenty money during emergencies too. Also, after having received money in the form of their salaries, it is no mystery that everybody loves to earn from that itself. That can happen from investments! But how would you say if you were told about investments that can also act as your gateway to save taxes to be paid on salaries. It would surely be like icing on a cake! For your information, this is very much possible! Income Tax Department does offer you tax exemptions on your savings, loans, and even investments in markets. In case of savings and market-linked investment you earn a specified interest for a decided tenure, however, you pay interest on your loans from banks. But not to worry, they all can help you save big on taxes. But to do so, you need to remember these four sections of Income Tax Act.
Here’s how your life becomes easier with just a little timely push. According to Ramki Gaddipati, Co-founder and CTO, Zeta, sections like 80C, 80D, 80E and 80EE will help you save big amounts – this is because of a cut in income tax you pay on your salary made possible if you invest money in these savings schemes.
This section gives you multiple options to save taxes, and also save for your future. One of them is your Employee Provident Fund (EPFO). The interest you earn on your income is also exempted from tax.
Other vehicles under Section 80C include a Public Provident Fund (PPF), National Pension Savings Scheme, Sukanya Samriddhi Yojana and more.
In addition to the government-linked savings scheme, you can also opt for a ELSS mutual fund — Equity Linked Savings Scheme. These scheme come with a lock-in period of 3 years and the saving under such schemes are exempted from tax. Most leading mutual fund houses in India offer ELSS schemes. These schemes will not just give you access to own an asset class, but also beat inflation over the long term.
Under Section 80C, you can save taxes as per your investments:
Tax savings = Investments X Tax Rate
Here’s some calculation to simplify this investment jargon:
Tax that you pay = 20.8 percent
Total investments: Rs 1.2 lakh under the provisions provided by 80C
The total tax saved that you will save will be a whopping Rs 24,960!
Health insurance: This section accounts for deductions made towards health insurance premiums. This includes premiums made for towards yourself and your dependent family. At present, you can avail a maximum deduction of Rs 25,000 per year.
Education Loan: This deduction is towards interest paid on education loan for higher studies. You can claim this deduction for up to a maximum of 8 years or till the entire amount is paid off, whichever is earlier.
House Loan: If you are a first time home owner, you can claim deductions on your interest amount under Section 80EE. Here, you can avail a tax deduction of up to Rs 50,000.