There are a number of savings and investment programs in India that not only help people reach their financial goals but also give them tax breaks. Individuals may see an increase in their overall returns and save money on their taxes as a result of these tax benefits. In this article, we’ll talk about five of these tax-saving schemes in India.
PPF, or Public Provident Fund,: The PPF is an Indian government savings plan for the long term. The money that goes into a PPF account is paid in after-tax dollars, but the interest that is earned in the account is not subject to taxation. Under Section 80C of the Income Tax Act, contributions to a PPF account are also eligible for a tax deduction. A PPF account can only have a maximum annual contribution of Rs. 1.5 lakhs.
NPS: The National Pension System The Indian government offers a pension plan called the NPS. An individual’s taxable income for the current year is reduced by making pre-tax contributions to an NPS account. Under Section 80C of the Income Tax Act, contributions to an NPS account are also eligible for a tax deduction. An NPS account can only receive a maximum annual contribution of Rs. 2 lakhs.
Scheme for Equity-Linked Savings (ELSS): A type of mutual fund known as an ELSS invests in stocks. Although the investments are eligible for a tax deduction under Section 80C of the Income Tax Act, after-tax funds are used to make ELSS contributions. In addition, ELSS investments’ long-term capital gains are taxed at a rate of 10%, as opposed to 20% for other long-term capital gains.
Life Insurance: According to Section 80C of the Income Tax Act, premiums for life insurance can be deducted from taxable income. Additionally, life insurance policy death benefits are exempt from taxation.
Home Loan Interest: Under Section 24 of the Income Tax Act, home loan interest can be deducted from taxable income. The maximum amount that can be deducted annually is Rs. Rs. 2 lakhs for unoccupied properties 30,000 for rental homes.
