5 Tax Saving Techniques You Need to Pay Attention to

tax saving techniques

Each year taxpayer is required to file their Income Tax Return (ITR). The Income tax return comprises the information of your annual income along with the payable tax which you require to file. Under different sections of the Income Tax Act 1961, there are some tax rebates and exemptions are being provided by the Government of India.

The key purpose for the same would encourage people to invest in a bigger way. Different ways are there which we can follow for dipping the tax outgo some of them are:

Some of the Tax saving techniques are:

1. Invest in tax-saving instruments
Underneath section 80C of the income tax act, the government of India authorizes some tax deductions upon the invested amount for some instruments. It is revealed that you can claim the tax deduction up to a maximum of Rs 1.5 lakh on the investments thru in these instruments.
Following are some tax-saving approaches for investment in 2022:

  • Public Provident Fund (PPF)
  • Employees’ Provident Fund (EPF)
  • Equity Linked Savings Scheme (ELSS)
  • National Pension System (NPS)
  • Sukanya Samriddhi Yojana (SSY)
  • Senior Citizen Savings Scheme (SCSS)
  • 5 years or more Fixed Deposits (FDs)

You could not only save your tax by investing in the aforesaid schemes nevertheless also you could build your long-term financial wealth.

2. The specific tax rule
In the existing times, there are two tax rules available for Indian citizens. During ITR filing you may choose either of them. But to have maximum tax savings it is vital to select suitable tax rules.
A new tax rule would offer a lower tax rate however, it does not allow tax deductions. Hence, if you are looking for tax deductions under section 80C of the income tax act then you must go for the old tax rule, and if not then you may choose the new tax rule to diminish your income tax.
If you are disordered about the new and old tax rules then you may take support from the online income tax calculator.

3. Health insurance can be owned for yourself and your beloved ones
Buying health insurance policies for yourself along with your family will also facilitate you to save the tax. Under section 80D of the income tax act, a taxpayer can be advantage of a deduction of up to Rs 25,000 for paying the health insurance premiums for themselves and their loved ones.
Beneath the same section, a senior citizen as an assessee can claim a tax deduction up to Rs 50,000. If you will pay health insurance premium for your parents then you could save an additional amount of Rs 50,000.

4. Tax benefits on home loan can be claimed
If you yield a home loan from any bank or non-banking financial institution then from your taxable income you are eligible to claim the deductions with respect to your loan’s interest and principal amount. This law permits maximum deductions of Rs 2 lakhs below section 24 with reference to the home loan interest and Rs 1.5 lakhs under section 80C of the income tax with the reference to the home loan principal.

5. Filing ITR within specified timelines
Everybody requires to file the Income tax return on and before 31st July of every year or the date specified by the income tax department. A penalty will be imposed if you forgot or miss or fails to file the ITR within the defined timeline.
The similar would assist you to file the ITR within the due date since it is necessary for supplementary objectives, like acquiring a housing loan, applying for immigration documents, conducting high-value transactions, and others.

To save the tax numerous people used to invest in tax saving schemes in dread at the end of the fiscal year. But the same will lead to the failure of the main objective of authorizing such deductions to motivate people for investing in the future.
Hence, on the commencement of every calendar year or fiscal year will be the best time to make tax-saving investments. Certainly, you are able to invest repeatedly in multiple tax-saving ways to secure the taxes and make wealth. You must learn about all the tax-saving investment options in the accurate way and you should invest only in those types of instruments that are appropriate.