Good Tax planning will help you enjoy the results of your following Income Tax returns. While the 2022 tax season is complete, there is no time to take a relaxed position. The best way to save on taxes is to acknowledge the list of significant returns. There are multiple tax-saving investments available that demand your attention.
Thus to help you save on taxes better, use this blog as your cheat sheet.
How To Save On Taxes For The Next Tax Season?
Before you file your next Income Tax, ensure you’re driving more savings. The best way to acknowledge this is via tax planning. There are two ways to save on taxes, claiming expenses and investments. Thus here is the list of the popular ways to save on Income Taxes:
1. Section 80C, 80D, and 80EE
You can save on taxes by conducting three core actions under this section:
- Conducting any investment of Rs. 1.5 lakh under Section 80C
- Investing in medical insurance under Section 80D of up to Rs, 1,00,000
- Home loan owners who are receiving interest can claim deductions of up to Rs. 50,000 under Section 80EE
2. Section 80C
The purpose of tax planning is to save money that can be used to finance your future. With Section 80C, the government allows claims for investments and expenses. This can be done with a limit of Rs. 1.5 lakh for each financial year.
To name a few are:
- A five-year fixed deposit in a bank will give you 6%-7% returns
- Investing in a public provident fund will provide you with 7%-8% returns
- Investing in ELSS funds will give you 15%-18% returns
- Investing in a national pension system will offer you 12%-14% returns
3. Start A Savings Account
Many salaried employees create saving accounts during their work tenure. Based on the time period, interest will be received. The good news is on up to Rs. 10,000, that interest is tax exempted.
4. Invest In Agriculture
Investing in the agriculture industry is better to enjoy the tax exemptions available here. Under section 10(1), any income defined by the former is tax exempted. This income varies such as:
- Rent received from your land being used
- Claiming land revenue
- Any money derived from using or selling agricultural products, etc
5. Generate Extra Income
With the rising expenses, having a second income has become normal. However, you can still save on taxes with this new income. Here are two ways:
- Create an individual HUF (Hindu undivided family) account.
- Invest the second income under Section 80C and enjoy the tax benefits
6. Investing in Provident Funds
Provident funds have proven to be a better return, especially for salaried individuals. All corporates deduct PF from the salary. Once salaried employees claim this, they receive a good amount. This is because the interest received from the provident fund is tax exempted.
7. Provide Donation
Under Section 80G, any money donated to well-established charities can be saved. Thus to avail money from this noble cause, a certificate of proof from the charities is required.
8. Home Loans
With home loans, a homeowner can easily save on taxes. Here are two ways:
- Home Loans for building or buying
Homeowners can enjoy tax benefits based on the principle amount and interest paid each year. If the amount paid is Rs. 1,00,000, homeowners are eligible under Section 80C. If the interest amount is Rs.1.5 lakh under Section 24 of the Income Tax Act, you can also save on taxes.
- Home loans for conducting renovation
Did you know you can save on taxes if you take home loans for the renovation? The home loan taken here will be considered under tax deductions.
9. Investing in Health Insurance Premium
Investing in a reliable health insurance premium can also help you save on taxes. Under Section 80D, this is made possible. If an individual pays a certain amount for a health insurance premium, that amount will not be tax deducted. In case you wish to save more on tax, invest in a senior citizen health insurance premium.
10. Creating Fixed Deposits
Lastly, creating a fixed deposit can be a good tax-saving investment. All you must do is invest an amount ranging from Rs. 1 lakh to Rs. 1.5 lakh. Keep this amount for a minimum of 5 years. You will receive a good interest amount and save on taxes for a year.