Planning for the future necessitates tax savings. People can achieve their financial objectives and simultaneously reduce their tax burden with an effective tax-planning strategy. Every year, the taxman, the chartered accountant, or the employer tell us that tax planning season is coming. But let’s face it: at some point in our lives, we’ve all wished for a world without taxes.
Taxes are viewed as a financial burden, but ignorance of tax-planning strategies is another factor that may exacerbate stress. If this applies to you, don’t worry. We have compiled a comprehensive and elaborate tax-saving guide to ensure that your journey through tax planning is simple.
The following is a list of some of the best investment strategies and investment options for 2022 that can help people get the most out of their tax benefits:
- Public Provident fund:
One popular way to save money on taxes is to invest in the Public Provident Scheme. To begin using long-term savings and investment products, you must open a PPF account at the post office or at specific branches of public and private sector banks. Contributions to the PPF account are earned at a rate of interest that is guaranteed. Section 80C deductions of up to Rs 1.5 lakh are available for these deposits each fiscal year. - Savings Account:
In accordance with section 80C of the Indian Income Tax Act, 1961, you can reduce your tax burden by investing in tax-saving fixed deposits. You can deduct up to Rs. 100 when you invest in tax-saving fixed deposits. 1.5 lakh out of your earnings. These FDs have a lock-in period of five years and taxable interest. Normally, financing costs fall somewhere in the range of 5.5% and 7.75%. - Senior resident savings scheme:
The Senior Citizen Savings Scheme (SCSS) is a savings program for people over 60 that is supported by the government. It offers relatively high returns and provides a steady and dependable income stream for people’s post-retirement years. In accordance with Section 80C of the Income Tax Act of 1961, principal deposits made into SCSS accounts are eligible for tax deductions up to a maximum of Rs. 1.5 lakh. However, this exemption is just material under the ongoing expense framework. - Life Insurance:
Because it safeguards a person’s loved ones in the event of a sudden death, life insurance is an essential part of any financial plan. Policyholders can take advantage of tax breaks on the premiums they pay for life insurance, whether it is traditional (endowment) or market-linked (ULIP). You need to keep track of several insurance plans that can help you save money on taxes. - Planned retirement
Life insurance can also be purchased through pension plans. Unlike other types of insurance, such as term plans and endowment plans, protection plans have a different purpose. If a person dies, pension plans aim to provide for them and their family. Pension contributions are covered by the Income Tax Act’s Section 80CCC, which is a subpart of Section 80C. The total amount of deductions permitted under each subpart of Section 80C cannot exceed Rs 1.5 lakhs.
