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What are tax-saving methods in India

Are you interested in tax savings? Tax saving methods have some of the best methods to help you save money. Tax saving schemes are meant to help you save taxes after the financial year is over. Check out tax-saving tips to help you get the most out of your income and investments. Check out our PPT u2013 What are tax-saving methods in India?

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What are tax-saving methods in India

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  1. Whataretax-savingmethodsin India? Asweneartheendofthefiscalyear2021–22,tax-saving investments are the flavour of the season. Tax planning is one of those activities that most of us put off until the end of the fiscal year. Though there are clever methods to avoid the tax trapandpreserveyourhard-earnedcash,cautiouspreparation isthe order ofthe day. InIndia,taxplanningistheprocessthatshouldbegininthe firstquarterofthefiscalyeartoallowtimetodevelopa sensibletaxsavingapproach.There’sabetterlikelihoodthat eachchoicewillbethoroughlyevaluatedbeforebeinginvested inby getting startedearly.

  2. Beforewegetintothetoptax-savinginvestmentproducts,let’s havealookatProvision80CoftheIncomeTaxActof1961, whichisthe mostprofitablesection oftheAct. Themostapparentincentivetoinvestinthe80CInvestments istosavemoneyontaxes.Bydepositinganequivalentamount in an ELSS or other qualifying 80C plan, you can reduce up to Rs One hundred fifty thousand from your taxable amount and saveup to Rs.46,800 in taxes. PublicProvidentFund For its consistent and secure earnings, the Public Provident Fund (PPF) is a popular investment option. Every 3 months, the PPF interest rate is adjusted. It is currently at 7.1 percent peryear.YoumayputmoneyintoaPPFfor15yearsandthen extendit for anotherfive years. YoucanengageinaPPFtoobtaintax-freeincomeifyouare seekingproductsthatarenotsusceptibletomarkethazards.

  3. PPFcontributionsareeligiblefortaxbenefitsintheformof deductions under Section 80C. Furthermore, it is classified as Exempt-Exempt-Exempt(EEE).Theamountdepositedandthe cumulativeamountandinterest earnedatthetime of withdrawalarealltax-free. EmployeeProvidentFund It counts as a Voluntary Provident Fund if you donate more thanthemandatory12percenttoEPF(VPF).Interestreceived on EPF contributions of more than Rs. 5 lakh per year would be taxed as of April 1, 2021, depending on your income tax bracket. In reality, the exemption ceiling has been increased fromRs2.5lakh,which wasdeclaredinBudget 2021. Nevertheless,afterdeductingthe30%taxonVPFdonations, back-of-the-envelope calculations reveal that you can potentiallyearnupto5.95percentinterest.GiventhatFD

  4. returnshavebeencontinuouslydecliningyearafteryear,thisis areasonableinterestrate. HealthcareInsurance Anincreaseinchronichealthdisordershasbeenattributedtoa sedentary lifestyle, long work hours, bad eating habits, and otherenvironmentalvariables.Furthermore,withtherising expensesofhealthcare,healthinsurancehasbecomeacritical investment. Itprotectsyouandyourfamilyagainsthealthproblemsthat mightdrainyourbankaccount,aswellasprovidestaxbenefits. Section 80D allows you to claim deductions for insurance premiums. Health insurance is one of the tax-advantaged investmentsthatmayhelpyousavemoneyinavarietyofways.

  5. Gratuity Itistax-freewhengiventoanemployeeuponresignation, superannuation,retirement,dismemberment,ordeath).The maximumamountofmoneythatcanbeexemptedisRs. 20,00,000.Tobequalifiedforthepayment,youmusthave performedaminimumof5 yearsofemployment. ELSS(EquityLinkedSavingsScheme) Accordingtofinancialexperts,ELSSmutualfundsareoneof themostpopulartax-savingtoolsinIndiafortworeasons: 1.Theyareequity-based,and 2.Theyhavetheshortestlock-inperiod.Becausetheyare market-linked,ELSScarryahigh-riskprofile,buttheyhavethe potentialto providehigher returns.

  6. AnothermajorfactorthatmakesELSSthemostpopular investment option in India is that it allows investors to contributeinsmallamountsovertimethroughasystematic investmentplan(SIP)ratherthanpayingalumpsum. NationalPensionSystem(NPS) Section 80C allows you to claim a tax advantage up to Rs 1.5 lakh on every donation you make to your NPS account. Your payments to your NPS account are eligible for an extra tax deductionofuptoRs50kundersection80CCD(1B).Investing inNPSallowsyoutoinvestinbothequitiesandbondsatthe sametime,allowingyoutoaccumulateasizableretirement fund. Conclusion

  7. Wehavegivenyousomepopulartaxsavingmethodsinthis blog. If you could implement our advice, you would be able to prepareyourincometaxesproperly.India’sIncomeTaxLawis substantialwithin itself. Itisadvisedthatyouengageafinancialplanneronline,suchas alawyeroraqualifiedCharteredAccountant,forthemost effectivemanagementofyourtaxcompliances.Wewishyou thebestofluckwith yourincometaxpreparations.

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