Every salaried worker is responsible for paying income taxes. Your hard-earned money is taken away in large part by taxes. On the other hand, the government provides advantages in the form of tax deductions for specific investment strategies that can be used to lower one’s taxable income.
The following is a list of investment options and strategies that can help people get the most out of their tax advantages:
Public Provident Fund:
The public provident scheme is one of the most widely used investment options for lowering one’s tax burden. You must first open a PPF account at the post office or specific branches of public and private sector banks before you can start using long-term savings and investment products. The PPF account pays a fixed interest rate for contributions. These deposits are eligible for Section 80C deductions of up to Rs 1.5 lakh per fiscal year.
Savings Account:
By investing in tax-saving fixed deposits, you can lower your tax bill in accordance with section 80C of the Indian Income Tax Act of 1961. You can subtract Rs. 1.5 lakh by investing in tax-free fixed deposits from your income. The interest earned on these FDs is subject to taxation and has a lock-in period of five years. The typical range of interest rates is between 5.5% and 7.75%.
Scheme for retirement savings:
The Senior Citizen Savings Scheme (SCSS), which is run by the government, allows anyone over the age of 60 to save money. It offers a dependable and consistent source of income for people’s post-retirement years and reasonably high returns. Up to a total of Rs, principal deposits into SCSS accounts are eligible for tax deductions. 1.5 lakh in accordance with the Income Tax Act of 1961’s Section 80C. However, this exception is the only one that applies under the current tax code.
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.
