Salaried persons can save a lot of money through various avenues available for tax savings if planned and executes in a proper manner. It is always better to start your tax planning at the start of the year rather than towards the end. An early start helps in better planning and better allocation.
Vikas Singhania, CEO, TradeSmart says investment in tax-saving instruments is the most popular amongst tax- payers. Tax deductions are allowed on the amounts invested in specified instruments under section 80C of the Income-tax Act, 1961.
Among the popular investment options are Employees’ Provident Fund (EPF), Public Provident Fund (PPF), Fixed deposits of minimum 5 years tenure or more. Life insurance policies, ELSS mutual funds, National Pension Scheme (NPS) and other pension plans.
Effective April 1, 2022, when the FY 2022-23 started, all individual salaried taxpayers have been given the option to either choose the old income tax regime or opt for the new one.
“Investments up to ₹1.5 lakh per financial year is allowed for deductions. This is applicable if the tax payer is following the old tax regime. In case the taxpayer opts for the new tax regime that offers concessional tax rates, many of the tax deductions and exemptions available under the old tax regime like the section 80C benefit will have to be forgone,” said Vikas Singhania.
Use Section 80C for tax saving
● Pension plans
● PPF accounts
● Equity mutual funds
● 5-year tax-saving deposits
- Life insurance policies or term plans
The last date date for filing Income Tax (IT) returns for Financial Year 2021-22 is July 31. This means tax payers must IT returns before this date unless the centre extends it. Often taxpayers wait till the last minute to file their income tax returns.
While planning on how to save tax on your hard earned money, a crucial activity, it is essential to evaluate correct income tax-saving schemes.
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