Given that the tax season is only a few days away, taxpayers need to choose some quick and smart options to reduce their tax costs.
Income Tax, Tax Savings, Tax Savings Tips, Last Minute Tax Savings Tips, Tax Savings Under 80C, Section 80CCD, 80D, 80G, NPS, Health Insurance, Risk Insurance
Income tax savings: Apart from Section 80C, Section 80CCD, 80D and 80G, some other sections provide tax benefits.
Pratik falls below the 30% tax threshold and must make tax saving investments during this fiscal year. Given the fact that only a few days elapse before the end of the tax season, any investment opportunity that has a lengthy process is no longer tied around that time. Pratik will have to choose some quick and intelligent options to reduce its tax costs. Section 80C of the Income Tax Act alone can help Pratik save Rupees 45,000 as an investment of up to 1.5 salmon is deductible under this section.
Liquidation of old tax cuts and reinvestment
You don’t always have to invest more money. Withdraw tax savings funds that have completed the vesting period and reinvest them to save taxes in the future. Systems such as ELSS (Equity Linked Savings Schemes) can be withdrawn after three years from the start of the investment. The Public Provident Fund (PPF), on the other hand, can be partially redeemed after six years. In addition, the income from these investments and the maturity amount are also tax-free in most cases.
Buy a health insurance policy
Health insurance premiums are tax-exempt according to § 80D. And health insurance is an urgently needed asset in your portfolio to cover the hospital costs for you and your family. Even if you shop at the last minute, you can still opt for a tax-saving model that adds value to your financial portfolio. Health policy premiums allow you to deduct Rs 25000 for premium contributions for children, spouses and the self-employed. For parents over 60, you can receive an additional deduction of Rs 50,000. However, the premium payment should be cashless in order to benefit from the deduction mentioned in this section.
Buy a risk insurance policy
If you haven’t done what’s necessary yet, buy a date cover to secure your family financially for a time when you may not be there. The guaranteed sum will serve as an alternative income if you are faced with premature death. You must seek cover 10-20 times your annual income. The premium costs for the risk insurance are reasonably low and can be deducted in accordance with Section 80C.
Invest in the national pension system
Whether employed or not, the National Pension System (NPS) is a lucrative pension scheme that can help you reduce your tax liability. Besides the tax deduction of up to Rs 1.5 lakh according to § 80C of the Income Tax Act, investing in NPS allows you to save an additional Rs 50000 according to § 80CCD. In a recent development it was proposed to make the entire corpus tax-free compared to the previous 40%. However, pension income will be taxed according to the applicable tax class. You can apply for your NPS account online by visiting the registration website.
Donate to eligible institutions
In a rather selfless note, you may consider making donations to charities and nonprofit organizations. Some of these funds are tax deductible according to § 80G. The amount of tax deduction may vary depending on the type of organization you are donating to. The deduction is only permitted if you donate to the registered companies.