Tax saving ways: It’s that time of year again, when most of us hurry to start making last-minute tax-saving investments before the fiscal year ends.
Individuals and businesses in India can benefit from a variety of tax-saving schemes that can help them reduce their tax burden. These programmes can result in substantial savings, allowing individuals and businesses to keep more of their hard-earned money. The following are five tax-saving schemes in India:
Employee Provident Fund (EPF):
In India, the EPF is a savings plan for salaried employees. Contributions to the EPF are tax deductible up to a maximum of INR 1.5 lakh per year under Section 80C. Employers must also make matching contributions to the EPF.
Equity-Linked Savings Scheme (ELSS):
ELSS are mutual funds that invest in equity and equity-related securities. ELSS investments are tax deductible under Section 80C up to a maximum of INR 1.5 lakh per year. ELSS funds have the potential for higher returns, but they are also riskier.
Public Provident Fund (PPF):
The PPF is a long-term savings plan offered by the Indian government. Contributions to the PPF are tax deductible up to INR 1.5 lakh per year under Section 80C of the Income Tax Act. The PPF also provides a fixed rate of interest, which is currently 7.1% per year.
National Pension System (NPS):
The NPS is a pension plan offered by the Indian government. Contributions to the NPS are deductible under Section 80CCD (1), up to a maximum of 10% of the individual’s salary (including dearness allowance) or INR 1.5 lakh, whichever is less.
Housing loan Interest:
Section 24 allows for tax deductions on interest paid on home loans up to a maximum of INR 2 lakh per year. Individuals who are repaying a home loan can benefit significantly from this.
Overall, these five tax saving schemes in India can save individuals and businesses a lot of money. Before making a decision, carefully consider the specific features and benefits of each scheme, as well as your own financial goals and risk tolerance.
Besides that, a one-in-three formula can be used to deduct rent paid, provided HRA is included in the employee’s salary.
