How to save tax like a pro in 2021
Saving tax is no cakewalk, and most of our earnings are spent on tax; however, if you are smart, you can make some investments that will help you grow your money as well as save tax. In this write-up, we will discuss some smart tax saving options that will help you save up.
Invest in a house: Buying a house is a prudent decision, and it will also help you save tax considerably. The principal amount and the loan amount are subjected to tax deductions under section 80C. You can claim for a maximum amount of Rs 1.5 lakh for the principal portion of EMI paid. Other miscellaneous expenses like the deduction for stamp duty and registration charges can be claimed under 80C, but it also has an overall limit of 1.5 lakhs under 80EE; you can claim for an additional deduction up to 50.000. Other government schemes like Pradhanmantri Yojana etc. are also helpful and can help you save a lot of money while you purchase your house. Thus buying a house can be a great decision if you are planning to save tax every year.
Invest in good medical insurance: With the rising amount of healthcare expenses, it is always a great idea to invest in aa good medical insurance that will provide coverage for you and your family. Investing in health insurance will also save your tax amount to a considerable extent. Under Section 80D of the Income-tax act, you can be eligible for a deduction of Rs 50,000 every year if you invest in health insurance. In addition, you can avail yourself of a tax deduction for yourself, your spouse, your children and your dependent parents.
Think about donation: If you are a benevolent person. If you make charitable donations for certain relief funds and institutions, you can claim a tax deduction under section 80G. You will have to furnish some details in your income tax return to avail of the benefits. You will have to provide the name of the done, pan and address of the done, and you will need to mention the amount of contribution. Under section 80GGA, you can save tax if you make a donation made towards scientific
research or rural development.
Check your PFs: Provident Funds are exempted from tax deductions under section 80C. You can check how much PF is deducted for you and the remaining amount you can do the tax planning.
Tax saving mutual funds: If you’re a risk-taker and are looking for high returns, you can consider investing in some tax-saving mutual funds. SBI will provide you with a lot of option for such mutual funds. To expect high rates in such mutual funds, you must be aware of the market NAV rates and have a fair understanding of the stocks.
Invest in Public Provident Fund: Investing in PPF can be a smart option if you want to save tax. All money deposited in PPF, as well as the interests, are exempted from tax. Upon completion of fifteen years, you can close the PPF account fully and withdraw all money. Premature withdrawal of 50 per cent ios allowed after five years. PPF helps you with risk-free returns, ans the returns are not subjected to market volatility. You can make a partial withdrawal from the seventh year onwards. PPF is always profitable as here you can enjoy a tax-free interest amount of 7.10%
If you want tour money to work hard for you, then you may consider investing in the above tax saving investment schemes as described above. The investment will help you with financial security and will support you during a crisis. It will also help you during the time of retirement. Hence roll up your sleeves and do investment planning accordingly.