Below are the top five methods for minimizing income tax:
1. Home Loan Benefits under Section 80C:
Acquiring a home loan can offer tax advantages under Sections 80C and 24(b). The yearly income allocated to servicing the principal sum is eligible for deductions of up to 1.5 lakh under Section 80C. Furthermore, Section 24(b) permits tax relief on the interest component of the home loan, up to Rs 2 lakh annually.
2. Health Insurance Policy:
Under Section 80D, individuals can seek tax deductions for the yearly taxable income allocated towards health insurance premiums. The exempted amounts vary depending on the insured person’s age.
3. Investing in Government Schemes:
Several government initiatives promise significant returns and tax exemptions. Contributions to programs such as the Senior Citizen Savings Scheme (SCSS), Sukanya Samriddhi Yojana (SSY), National Pension Scheme (NPS), and Public Provident Fund (PPF) can yield tax benefits of up to Rs 1.5 lakh under Section 80C.
4. Life Insurance Plans:
Under Section 80C, premiums paid towards life insurance policies qualify for deductions. Additionally, the proceeds received upon maturity or in the event of the insured’s untimely demise fall under Section 10(10D). Tax advantages of up to Rs 1.5 lakh can be availed annually on premium payments.
5. Tax-Saving Investment Choices within Section 80C:
Section 80C encompasses numerous well-known tax-saving avenues, with a cap of Rs. 1.5 lakh per financial year. These encompass investments and expenditures eligible for deductions by individuals and HUFs.
Comprehending and applying these tactics can lead to significant tax reductions, providing financial advantages and augmenting overall income. It’s advisable to seek guidance from a financial advisor to customize these methods according to your individual financial circumstances.
