Income Tax News: The opportunity to avoid taxes for individuals in the workforce or business owners will begin on April 1, 2024, for the upcoming fiscal year. In addition to providing tax benefits, a solid tax-saving investment strategy offers the possibility of earning income that is tax-free. Provisions for deductions pertaining to various investments, savings, and costs that the taxpayer may have incurred during a financial year are found in the Income Tax Act, 1961.
Understanding Taxation Across Investments
Different investments and asset classes are subject to various taxation. For this reason, it becomes crucial for investors to arrange their portfolio in a way that aligns with their own financial objectives and accounts for the possible tax liability. These are a few choices that can lower your tax liability.
Unlocking Tax Benefits with Fixed Deposits
You can benefit greatly if you plan and invest in a fixed deposit with the goal of reducing your tax liability. You can benefit from a tax deduction through an FD of up to Rs 1.5 lakh under Section 80C.
Government-Controlled Schemes
An individual can save up to Rs 1.5 lakh in taxes on their entire yearly income by participating in government-controlled schemes under Section 80C of the Income Tax Act. Investments in the Public Provident Fund (PPF), Senior Citizens Savings Scheme (SCSS), Sukanya Samriddhi Yojana (SSY), National Pension Scheme (NPS), and National Pension Scheme (NPS) are eligible to receive the discount.
Leveraging Home Loan Repayments
A tax deduction of up to Rs 1.5 lakh can be claimed under Section 80C for the amount of annual income used to pay back the loan’s principle. In addition, under Section 24(B), a reimbursement of up to Rs 2 lakh is available on the interest payment amount. Section 24 offers tax incentives if the house is finished within five years (B). Likewise, Section 80EEA provides greater tax savings for first-time home builders.
ULIPs and Premiums under Section 80C
Policyholders who purchase market-linked insurance plans (ULIPs) or standard life insurance benefit from lower premium taxes. Section 80C governs the amount of the premium that was paid. In contrast, Section 10(10D) governs the amount received upon the policyholder’s death or the expiration of the policy term, whichever occurs first.
Tax-Efficient Life Insurance
HDFC’s Click2Protect Super One such non-linked, non-participating individual life insurance product is life, which you can invest in to meet your particular needs while also saving money on taxes. This is a highly unique kind of insurance where adjustments are made based on requirements. This insurance allows you to accomplish all of these things, including extending the policy term and increasing coverage following marriage or the birth of a child.
Flexible Policy Adjustments for Life’s Uncertainties
This model allows for a great deal of flexibility in policy adjustments. The policyholder has the option to modify his life insurance and obtain coverage for eventualities such as terminal illness and abrupt death. When the insurance matures, the individual who selected the Return of Premium option receives his whole premium payment back.
In the sad event that the insured passes away suddenly before the policy expires, an additional sum is paid to them. In the event that an incurable condition is discovered, this insurance plan additionally offers assistance with Acceleration of Death Benefit up to the age of 80.
National Pension Scheme
Investing in this scheme currently offers tax avoidance while investment as well as financial assistance in the form of a pension after retirement. Apart from the Income Tax Section 80C, an extra exemption of Rs 50,000 can be claimed under Section 80CCD (1B). As a result, you can deduct from your taxable income up to Rs. 2 lakh for NPS investments.
Sukanya Samriddhi Yojana
Any bank or post office will allow you to open an account in your daughter’s name under the Sukanya Samriddhi Yojana if she is under ten years old. You can invest as little as Rs 250 and as much as Rs 1.50 lakh a year in this. At the moment, it receives 7.6% interest annually. As soon as the daughter turns 21, this account matures. This just requires the money to be deposited for a period of 14 years.
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