taxpayers must manage their income tax deductions investments before the calendar strikes the end of Financial Year. Once the financial year ends, no such plan can reduce your taxable income and you have to pay higher tax in July. There are few last-minute steps that can save a big amount of your tax before you do income tax filing in July.
Section 80C is the strongest section which avails a lot of deductions on your taxable income and you can avail a maximum of INR 1.5 lakhs.
- Public Provident Fund: investment can be done from INR 500 to maximum INR 1,50,000, and such amount will get you equal income tax deductions.
- Pension Funds: investment into pension funds can also avail deductions as described under section 80CCC.
- 5-yearsFixed Deposits with a lock-in period of 5 years are also eligible to get you deductions on your taxable income.
- Provident Funds and Voluntary Provident Funds which are deducted from the employee salary as a contribution and take employer’s contribution can avail deductions during income tax filing under Section 80C.
- Equity Linked Savings Scheme or ELSS are the best options to save taxes on taxable income by investing in mutual fund.
- Life Insurance Premium plan taken for self or spouse or children are eligible to avail deductions on your taxable income.
- Sukanya Samridhi Account can be opened at any time from the girl child born to the time she turns 10 years old. The deposit limit is from INR 1000 to INR 1.5 lakhs per year and 2 such accounts can be open for 2 girl children and both will avail income tax deduction to you.
- Deductions are also available for home loan interests and principal payment as described under section 24 of the Income Tax Act.
- Unit Linked Insurance Plan or ULIPs are good investment instrument as it covers insurance and provides deductions on taxable income as this “Tax Saving Funds Can Save Bigger on Income Tax Return”.
- National Savings Certificate or NSCs are good instruments to save taxes during income tax filing. The maximum deduction available against this section is INR 1.5 lakhs.
- Senior Citizens Saving Scheme are also a good instrument to avail deductions on taxable income. These schemes are specially meant for the senior citizens above the age of 60 years. However, no age restrictions have been specified for defense personnel on fulfilling certain conditions.
- Also, the deduction can be availed by investing in National Pension Scheme up to INR 50,000.
All these investments must be done before the financial year ends to avail deductions for that specific year of income tax filing.