Paying income tax at the end of the financial year is often a stressful and challenging task for most people. Everybody is also always trying to look for ways in which they could save tax. If it makes you feel any better, there are various ways in which you get tax exemption. 5 ways you can save tax this year are as follows:
- Buying insurance policies is one of the best ways to save taxes. Insurance policies like ‘Life Insurance Policies’ provide life coverage and help in saving tax under section 80C of Income Tax Act. ‘Unit Linked Insurance Plan’ offer the benefit of both investment and protection to its investors. These are market linked insurance plans and help your money to grow. Medical expenses can be taken care of by ‘Health Insurance Policies’. These also help in saving tax upto an extent.
- You can reap benefits of whatever you invest later through investments. You can get the tax benefit by investing in ‘Mutual Funds’ like Equity Linked Saving Schemes (ELSS). ‘Tax Saving Fixed Deposits’ help in saving tax and you can gain an attractive interest on your deposits. With no limits on how much you can put in, ‘Post Office Time Deposit’ and with a minimum investment of Rs.100, ‘National Saving Certificates’ are also good options for investments and are also eligible for tax exemption. In addition to all the above mentioned investments, ‘Provident Funds’ also known as the ‘Pension Fund’ are generated to give us long-term returns.
- You can also save tax through loans. You can save tax by taking home loans for constructing or buying a house. Home loans taken for reconstruction and renovation are also eligible for tax deduction.
- You can also save tax through Education Loan under Section 80E of the Income Tax Act.
- Last but now the least, the best way to save tax is to donate to a charity. Even though all donations do not guarantee a 100% tax rebate. Your taxable income becomes the total amount minus the donated amount. Most philanthropic organisations can legit offer a 100% tax exemption in Form 16s.
Everybody looks forward to saving tax. Donating to charities is not only morally satisfying but charitable organisations also offer tax rebates and exemption under Section 80G of the Income Tax Act, 1961. The most important thing is to identify a charitable organisation that is working on the causes you believe in. Once you have identified an organisation, you can become a donor and become part of making a difference.
Donating to charities like Save the Children will let you support India’s most vulnerable and marginalised children from the remotest corners. Donate now and at the same time save tax. You can also donate online.