Planning your taxes might seem like a difficult task, especially when you are close to the financial year-end. Therefore, you should start as early as possible. Follow this article and find out the various tax saving options you could benefit from.
For individuals having a salaried income, it is important to plan their taxes. You can diversify their investments such that you can exhaust your deductions of Rs.1,50,000/- under the section 80C of Income Tax Act, 1961. One can invest in a life insurance policy, PPF, PF, mutual funds , ELSS, tax-saving FDs for five years, repayment of housing loan – principal amount, NSCs etc.
National Pension Scheme (NPS) is a great option for both tax saving and wealth creation for a retirement fund. By investing in NPS, you could claim the employee’s contribution as deduction under section 80CCCD(1) (maximum up to Rs.1,50,000/-) and an additional of Rs.50,000/- under section 80CCD(1B). Whereas the employer’s contribution is allowed as deduction under section 80CCD(1) up to 10% of salary.
Individuals can claim deductions for their health insurance under section 80D up to Rs.25,000/- for self, spouse and children. Further, an additional assumption is allowed if you are also paying towards your parent’s health insurance premium of Rs.25,000/-. In case your parents are senior citizens, then the limit is Rs.50,000/-.
Apart from the above investments and insurance planning, you also are eligible for deduction of interest income arising on account of saving account held by you under section 80TTA(1) up to Rs.10,000/-. At the same time, senior citizens enjoy exemption of interest from banks, post office, etc., to a maximum of Rs.50,000/- under section 80TTB.