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How to save tax, or more specifically, how to opt for the best investment plan, is a question that each of us has. Tax planning is important, but so are tax-saving strategies. With the finest tax saving options in India, you may save and invest your money in the most reliable tax saving schemes. The beginning of the fiscal year is the best time to plan for tax saving investments. This will ensure that you do not pay any more taxes and that you save taxes in India and avail year-long profits on your tax-saving investment.
While each individual wants to save money on taxes in India, only a few of us are successful. This could be a lack of information or difficulty incorporating the best-suited option into your investing strategy. When it comes to saving taxes, life insurance policy, public provident funds, ULIPs, or even equity-linked saving schemes are some of the options that pop into your head immediately. However, there some other means through which you can save taxes.
So, we’ve compiled a list of the five unusual investment options that can help you understand how to save tax in India. Read on to know more about these options and draw a comparison to make an informed investment decision.
When people inquire about how to save tax in India, one of the most common solutions is the National Pension Scheme. It enables people to save money for their retirement plans in the future. You can pay the schemes on a regular basis whenever it is convenient for you. This plan is open to all Indian nationals between the ages of 18 and 60. You can avail deductions for your NPS investment under Section 80C and Section 80CCD (1B)
If your parents are senior citizens, they may be eligible for higher tax advantages and income limits. You can invest on their behalf and count it as a gift to them if their post-retirement income is in a lower tax bracket than yours
There will be no tax on the present you give them, and any future earnings from the investment will be theirs to claim. Senior citizens’ fixed deposit plans, post office schemes, senior citizens’ savings schemes, and even equity mutual funds are all options you can consider for the same.
Section 80G of the Income Tax Act permits you to fulfil your social responsibilities by donating to designated charities or religious organizations. You can get a 50-100% tax exemption if you donate to such a charity. In addition, the government has set up funds such as the PM National Relief Fund, National Defense Fund, PM CARES Fund (established specifically for COVID-19 initiatives), etc., that can assist you in achieving a 100% exemption.
The Hindu society’s traditional joint family structure resulted in a distinct tax personality in the Indian Income Tax Act, the Hindu Undivided Family. If you have many sources of income in addition to your pay, declaring them as HUF profits will significantly lower your tax liability. For Hindus, Sikhs, Jains, and Buddhists, the HUF is considered a separate financial organization that can act on behalf of all family members. Family members can donate their extra personal income to the HUF and avoid paying tax on any later revenue from investments made with those funds.
Individuals can claim tax deductions of 50-100 percent when they donate to certain political parties certified by the Election Commission of India. These contributions can be made directly to a registered political party (under section 29A of the Representation of the People Act, 1951) or indirectly to a registered electoral trust. In addition, if payments are made by check, net banking, or UPI, deductions are available under section 80GGC. Donations made in cash or in-kind, on the other hand, do not qualify for tax deductions.
To get the most of your money, you should look into tax saving options in India and make a well-thought-of strategy. Tax planning is the most effective financial strategy, and anybody who pays income tax can benefit from it. As a result, one must consider all of their options before making a decision. Making sound tax-saving investments and participating in reputable financial instruments are the best ways to save money on taxes. Assessing the advantages and disadvantages of reliable tax saving schemes to enjoy many tax benefits can simplify one’s financial path.