Income Tax News: Tax-saving techniques are essential for people in India whose salaries exceed Rs. 55 lakhs in order to maximise financial planning and reduce tax obligations. Here are some practical ways to reduce your tax liability in this bracket.
Invest in Equity linked Savings Schemes (ELSS)
Under Section 80C of the Income Tax Act, ELSS mutual funds offer the combined advantages of possible market gains and tax savings. Compared to conventional tax-saving instruments, ELSS funds provide greater growth potential and flexibility with a mere three-year lock-in term.
Utilize NPS (National Pension System)
In addition to the ₹1.5 lakhs maximum allowed by Section 80C, people who contribute to the National Provident Fund (NPS) may be eligible to claim an extra deduction under Section 80CCD(1B) of up to ₹50,000. NPS guarantees retirement planning with market-linked returns in addition to assisting with tax savings.
Opt for Voluntary Provident Fund (VPF)
Through VPF, employees can voluntarily increase their EPF (Employee Provident Fund) contributions. While VPF offers the opportunity to invest more and receive tax benefits under Section 80C, EPF contributions are required.
Maximize Home Loan Benefits
Taking up a home loan allows you to realise your dream of becoming a homeowner while also deducting interest payments (under Section 24) and principle repayments (under Section 80C). Making use of these advantages can drastically lower taxable income.
Explore Tax-saving Fixed Deposits
Financial institutions and banks provide five-year locked-in tax-saving fixed deposits that are eligible for Section 80C deductions. The initial investment is tax deductible, even though the interest is taxed.
Donations for Charity
Under Section 80G, contributions to qualified charity organisations or funds are deductible up to a certain amount. Contributions to reputable charity assist with tax optimisation in addition to supporting a worthy cause.
Health Insurance Premiums
Investors can deduct under Section 80D from their taxes if they purchase health insurance for themselves, their families, or their parents. Tax savings are also available for premiums paid by riders with serious illnesses.
