Now less than two months are left for the end of the current financial year 2021-22. Companies have now started deducting advance tax as well. If you want to save as much tax as possible, then it is better to get some work done as soon as possible.
CA Ajay Bagadiya is telling you many such ways by which you can save tax of Rs 1.50 lakh under section 80C of Income Tax. By the way, apart from 80C, there are many other measures by which you can save tax.
Daughter will save your income tax
If your daughter’s age is less than 10 years, then you can invest in Sukanya Samriddhi Yojana in her name. The interest rate on this is 7.6 percent. There is also the benefit of tax deduction on this. On the other hand, Bagdia explains that the tax exemption on housing rent allowance is calculated on the basis of whether you live in a metro city (50 percent) or a non-metro city (40 percent). Under no circumstances will the exemption be more than HRA.
Invest in PPF
If you have not chosen this option yet, then it is better to start investing in it early. Public Provident Fund i.e. PPF is considered to be the best government investment scheme to save tax, in which you can invest up to Rs 1.5 lakh every year. It currently earns 7.10 percent interest annually.
Use of NPS
Bagdia explains that the National Pension Scheme ie NPS is a retirement savings plan run by the government. 1.5 lakh can be invested annually under section 80C and an additional 50 thousand rupees can be invested under section 80CCD (1B). Apart from this, tuition fee, stamp duty for house registration and National Savings Certificate are also effective measures in tax exemption.
Senior Citizen Saving Scheme
Investment in this savings scheme for senior citizens can be done through banks and post offices. It earns an interest of 7.4 percent per annum. The investment made in this gets tax exemption under section 80C.
If you don’t have insurance, get it soon
Insurance is also one of the effective ways to save tax. Unit linked insurance plans (ULIPs) and traditional insurance plans are eligible for tax exemption on premiums, but keep in mind that ULIP premiums do not get tax exemption if the premium amount exceeds 2.5 lakhs.
Tax saving benefits of tax exemption from fixed deposits also
Tax exemption can be availed through tax saving FD. But it is not a very good option as it will give less than 5 per cent annualized returns and also has a lock-in period of 5 years.
Equity Linked Savings Scheme: Up to 1.5 lakh exemption under 80C
This is a scheme of Equity Mutual Fund. In this, investment is available up to 1.5 lakh under 80C. Returns up to Rs 1 lakh per annum are tax-free and the lock-in period is also the shortest of 3 years.
These tax benefits apart from 80C
Tax exemption is available on housing rent allowance, leave travel allowance, home loan interest and children’s education loan interest. Donations under section 80G and premium for health insurance under section 80D also get tax benefits. The exemption limit on home loan interest is Rs 2 lakh and there is no tax exemption limit on education loan interest. That is, you will get full exemption of the interest you pay.
