Saving up on taxes can definitely help you grab on a considerable chunk of money, which usually slips out of your hand. Here are some of the legal and valid ways of tax planning which might save you from any kind of trouble and save up on your taxes too –
- Equity Linked Saving Schemes –
The equity-linked saving schemes are actually mutual funds which function differently than the normal investment funds. These invest eighty percent of their overall assets in equity. They also have a lock time of three years. During these three years, the money is exposed to the market in a way that it relatively remains safe while gaining interest profits. The capital can be accessed after a period of three years. These funds might not yield as much interest as one might earn from other investment options, but the benefit is that these can be used as a safe cover to keep your money without it being subjected to any tax on it.
- Public Provident Fund – public provident funds are saving schemes, which are established by the government itself. They have a time of fifteen years and are available in most of the banks and post offices. The rate of interest revolving around provident funds tends to get altered every quarter of a year. Currently, the rate is 8%, and the interest gained through PPF is not liable of any tax imposed on it. This is a very common and relatively safer option when it comes to saving tax along with investing your money and allowing it to grow at a considerably good rate.
- National Saving Certificate – national saving certificates are also investment schemes, which have occupancy of five years and come with a rigid interest rate. The interest rate over some time has been 8%. The interest on the national saving certificate is by default calculated towards the limit amount of one point five lakhs under the section 80C. The capital and interest is tax deductible only under the condition that no other investments tend to utilize the limit.
- Savings bank account–this is known to be the easiest and convenient way of availing deductions on tax under the Income Tax Act which can be claimed by an individual. The interest gained on the money stored in any savings bank account is tax-free up to certain limits. Under the section 80TTA this limit is rupees ten thousand per annum and under the section 80TTB for senior citizens, the amount is fifty thousand for both the fixed deposits as well as the savings account interest.
These are some of the very prominent, convenient and easy ways of saving up on income tax in India. There are many more options such as EPF, home loan schemes, tax saving SIP, National pension systems or health insurances which can assist you in saving up taxes while making use of your money.