4 Smart Tips that Will Help You to Save Taxes

However, the tax-saving loops can be extremely integrated for a beginner, and it gets difficult for a taxpayer to capitalise on the multiple tax-saving ways. There are plenty of different common ways to save tax present that can be used by anyone to obtain some tax relaxation. Out of all the tax-saving ways 4 lucrative and popular ones are -

1. Invest in Insurances:

   If a person is seeking for the most beneficial and popular way of saving tax, then investing in insurance schemes would be the best option. Taxpayers can buy life insurance, health insurance or any other type of insurance for himself or any other member of the family to get deduction under the Income Tax Act. The limit deduction under these sections depends upon the current financial policies of the government.
   
   By purchasing health insurance policies, people can get deductions under Section 80D, 80DD and 80DDB of the Act. Life Insurance plans, including term plans, ULIPS, comprehensive life plans, etc. allow you to avail tax deductions for the premium paid under Section 80C and Section 10(10D) of the Act.
   
   These deductions are offered to encourage people to invest in different insurance schemes and improve their savings balance. 
   
   

2. Other Investment Instruments:

   Apart from investing in insurance schemes, taxpayers can invest in multiple other schemes as well. Under Section 80C, 80CC, and 80CCD of the Income Tax Act, an array of other investment instruments is deductible from the gross taxable amount. The other investment instruments that can serve the purpose of tax saving are -
   • Tax-Saving FD - It is a type of fixed deposit under which the salaried can save money under the guidelines of the Income Tax Act 1961 and get benefits under Section 80C. The tax saving FD can be bought from banks, post offices, and other private financial institutions. These FDs have a fixed lock-in of 5 years. 
   • ELSS Mutual Fund - Equity-linked Saving Schemes (ELSS) funds are tax saving mutual funds under which saving is made in the equity, and equity-related entities of corporate organisation ELSS is completely deductible under 80C. 
   • PPF Scheme - Public Provident Fund is a saving as well as a tax-saving instrument offered by the government. This instrument was launched by the National Savings Institute of the Ministry of Finance in 1968 to mobilise small savings of salaried people to encourage them to save money. 
   • ULIPs - Taxpayers can invest in unit-linked insurance plans to gain tax benefits. The premium invested in a ULIP is divided between insurance and investment. Thus, you avail triple benefits of life insurance, corpus building and tax saving. 
     
     

3. Take Loans:

   The other promising ways of tax-saving include taking loans. Taxpayers can take loans under numerous categories, but two prominent loan redemptions are received on -
   • Home Loan - Under Section 80C, salaried people can claim deduction on the principal amount of home loan availed. Furthermore, interest paid to the lender is deductible under Section 24 of the Act. Tax deduction on loan taken for home improvement or construction can also be enjoyed. 
   • Education Loan - A salaried person can take an education loan for himself, spouse, children or any students for whom he is a legal guardian and get remittance under Section 80E. It is one of the most recommended tax saving schemes because there is no maximum deduction limit. Although the deduction is only applicable to the interest amount, not the principal amount. 
   • HRA Deduction - House Rent Allowance is allowed by the employer if the employee is living in rented accommodation. The HRA can be deducted from the gross taxable income. The income tax law has multiple exceptions listed down for the people who claim deduction under this scheme. Thus, carefully read out all the rules before getting a deduction under this head. 

There are plenty of different ways to save tax available. It is just a matter of thinking smartly and saving in the appropriate tax saving schemes. 

Visit PNB MetLife website to know more about term plan, term insurance & life insurance.

The income tax is levied on all earning individuals who fall under a taxable income bracket. The income tax is paid to the Government of India and is charged annually. However, there are several tax deductions and exemptions that you can claim to lower your tax liability. The Income Tax Calculator helps you ascertain your tax output for a financial year based on your taxable income. This can help you plan well and save tax using the tax-saving deductions and exemptions, if possible. 

*Tax benefits are as per the Income Tax Act, 1961, & are subject to amendments made thereto from time to time. Please consult your tax consultant for more details.