Every working individual and business owner is familiar with the term ‘income tax’. For most, it might lead to nightmares, but income tax inevitably lowers the stress, if planned correctly. Most of the people find it challenging to pay income tax at the end of the financial year. Utilising various insurance policies and rent receipts helps us overcome this dreaded task. However, if you are looking to save on taxes and safeguard yourself from unwanted financial stress, then it is essential to check out all the tax saving investments.
To get an idea about how much you can save on taxes, you need to understand the concept of slabs. By an individual’s annual income, taxpayers are categorised into different slabs. So, if you’re looking for means to save on taxes, which everyone does, then you can invest your finances in insurances or markets as well putting them away in saving instruments. Additionally, one can also utilise different allowances to save your taxes.
Understanding the different means and methods to save up on income tax is imperative. If not correctly understood you might end up paying a significant amount of money in the form of taxes to the government every year.
Financial – Tax Saving Investments
One of the ways you can secure your future financially is the investment. Investments are financial instruments that offer better benefits in the future. Apart from this security, investments also make for a significant tax saving instrument. Yes, it can prevent you from shelling out much of your cash.
Equity Linked Saving Schemes come along with tax benefits. With a lock-period of 3 years, it is less compared to fixed deposits and PFF’s. Additionally, another significant advantage of mutual funds is that it offers a substantial return on investments and thus makes for a great option.
Tax Saving Fixed Deposit
Fixed deposit is yet another great option when it comes to tax saving investments. From Rs.1 lakh right up to 1.5 lakhs can be invested in a fixed deposit; and in return, you can gain an attractive interest along with excellent tax benefits. Additionally, FDs comes with a lock-period of 5 years.
Provident Funds are also widely known as Pension Fund on account of their long-term return benefits. Deposits made in the form of a provident fund are eligible for tax deduction under section 80C of Income Tax Act.
The above-mentioned instruments are some of the popular ones, but not limited to the list. There are several others too such as endowment insurance plans, ULIPs etc. You can opt for the suitable one to your needs.