Income tax is the unfortunate reality of income. If given a choice, most of us wouldn’t want to pay tax on the income we earn. But we should, because the income tax we pay is an important source of revenue for the government. As citizens of India, we are also consumers of the country’s public infrastructure and facilities. When we want these facilities and infrastructure to improve, it is also our duty and responsibility to contribute to building and maintaining it. Paying income tax and filing income tax returns is one way of doing that. Income Tax saving isn’t as difficult as it’s been thought. There are so many things that can be done unknowingly which can save tax. All need to be done is to claim the tax benefits. By, just putting a little effort, one can save more tax than imagined. Choosing practical and legal tax saving schemes anyone can incur several regular expenses which makes an employee eligible for tax benefits.
Tax Saving options in India
The most popular tax-saving options available to individuals and HUFs in India are under Section 80C of the Income Tax Act. Section 80C includes various investments and expenses that can be used to claim deductions. The Section 80C limit is ₹1.5 lakh in a financial year, which means that you can use this entire amount to reduce your taxable income.
Tax Saving Investments for the year
The best time to start planning your tax-saving investments is at the beginning of the financial year. Most taxpayers procrastinate till the last quarter of the year and end up taking hurried decisions. Instead, if you plan at the start of the year, you can make investments that can also help you fulfill your long-term goals. Tax-saving investments should be used to build wealth as well, not only to just save tax.
Use the following pointers to plan your tax-saving for the year:
- Check the tax-saving expenses that you’re already making that you can claim. This includes expenses like an insurance premium, children’s tuition fees, etc
- Deduct this amount from ₹1.5 lakh to figure out how much to invest. The entire amount doesn’t need to be invested if expenses are covering it.
- Choose tax-saving investments on the basis of your goals and profile. ELSS funds, PPF, NPS, and fixed deposits are some of the popular options.
This way, one can figure out how much one needs to invest to save taxes. It is best to begin investing in the first quarter of the financial year so that one can spread the investments over the year. Sumopayroll’s My IT Savings option will allow choosing the savings type for the current financial year (2017 – 2018) by using this the burden will be lessened at the end of the year.