Tax savings schemes: Tax saving is one of the main interests of taxpayers around the world, as a large portion of an individual’s income is spent on offsetting duties and excise. Investing in tax saving schemes and planning how to save more taxes is the ultimate goal of these people, who are looking for new ways to save their money. To do this, many factors such as the amount of money that can be saved, the time period for doing so, the reason for saving said money and other things have to be taken into consideration. For this, there are many schemes that one can opt for.
For example, under the Income Tax Act of 1961, an investor has the privilege of saving tax on his investments. Also, under Section 80C of this Act, a taxpayer can save a lot of money in a fiscal year.
Section 80C of the Income Tax Act
Section 80C of the Income Tax Act is one of the most popular tax saving options for individuals and HUFs in India. This section contains a host of investment and expense options that you can benefit from. In this section, you can save up to Rs 1.5 lakh during a financial year.
Here are some investment options where a taxpayer can save money over a 5-year lock-up period:
Unit-Linked Insurance Plans or ULIP
A unit-linked insurance plan includes a combination of insurance coverage as well as investments in bonds or stocks and is one of the most common options for people who want to save taxes. The beneficiary, under this plan, has to pay a certain premium each month towards ULIP. Some of this money is used for insurance coverage, while the rest goes to investments in stocks, bonds, etc. Under Section 80C of the Income Tax Act, ULIP premiums are eligible for a tax deduction of up to Rs 1.5 lakh in each financial year. Under another section, the amount you get through your ULIP at maturity is exempt from tax deduction.
Tax-saving Fixed Deposits are like regular DFs, but come with a 5-year lock-in period. You can avail a maximum deduction of up to Rs 1.5 lakh for investments in tax-saving FDs. Any resident individual is eligible to invest in tax-saving DFs. However, there is a lock-up period of 5 years. In addition, interest earned on these investments is taxable.
Employees’ provident fund
The Employees Provident Fund is a government-backed tax savings program under which all employees would be enrolled in the Employees Provident FINd organization once they enter service. The entire PF balance (including interest) is tax exempt if withdrawn after five years of continuous service. Currently, the EPFO offers an interest rate of 8.50% per annum.
Read all Recent news, recent news and Coronavirus News here.