7 Easy Ways To Save Taxes in India

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7 Easy Ways To Save Taxes in India

Most of the investments or deductions that can be made are limited to a total of Rs. 1.5 lakh. If you use one of these investments, you would definitely be reducing the room for another. The amount you allocate for each fund would depend entirely on your financial needs. Here are some of the options that you can try out.

Tax-saving Fixed Deposits:

One of the ways to save taxes is to use Fixed Deposits. The maximum tax exemption is limited up to Rs. 1.5 lakh. However, the minimum term is fixed at 1.5 years. The rate of interest is currently fixed at 7 to 8%. However, the returns on these investments are taxable.

Public Provident Fund:

Public Provident Fund (PPF) is a savings scheme that has a tenure of 15 years and is available at most banks and post offices in India. The rate of interest changes every quarter, but the interest rate is around 8%. A benefit of this scheme is that the interest is tax-free.

National Saving Certificate:

The National Saving Certificate has a tenure of 5 years and the rate of interest is fixed. The rate of interest here is also around 8%. The interest on the NSC would also count under the cap under 80C.

Tax Saving ELSS Funds:

The tax saving mutual funds invest as much as 80% of the assets in equity. The lock-in period is of 3 years. The returns on the ELSS funds are dedicated to offering long-term capital gains. These funds can work on any mode – SIP or lump sum. Both dividend and growth options are applicable. The tax saving ELSS funds offer one of the best ways to get good returns along with saving your taxes.

Life Insurance:

The premiums of the life insurance policies like term insurance, ULIPs and endowment policies are also tax deductible, though the limit is up to Rs. 1.5 lakh. Life insurance policies offer a benefit to the family members of the deceased and offer good returns at the disturbing turns of life.

EPF:

EPF stands for Employees’ Provident Fund. According to the EPF Act, 12% of the pay of the employees would be deducted in the organised sector and directed to this fund. Even this deduction would count towards the maximum Rs. 1.5 lakh limit that is presented under the Section 80C of Income Tax Act.

Home Loan Repayment or Paying Tuition Fees:

Repaying the principal amount of the home loan or the payment of tuition fees for your children is also tax deductible. It also falls under the maximal 1.5 lakh cap that exists for tax deductions.

These are some of the finest ways to save tax under the Income Tax Act. Financial planning can be quite difficult and proper survival today depends a lot on managing finances. You can choose the options that suit you and try them out for saving on your tax payments.

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