Top 5 Ways To Save Your Income Tax

Saving through income tax returns needs a precise strategy. It’s better to get a plan ready for your upcoming financial year to save a good amount and avail some tax benefits.

There are lots of new trends in financial planning this year. While some remain the same, filing your income tax returns at the end of the financial year becomes a crucial task. You have to attach all the actual receipts, bills, or investment documents to file your returns. So let’s save your peace of mind with great planning for financial relief and get it done in the best possible way.

The Income Tax Act, 1961 has several sections that can be utilized for reducing some taxable amount annually. It applies to some specific deductions that can be claimed in the income tax returns. However, there is a certain limit on the tax-saving amount and is set by the government. Still, an expert in this domain can save on income tax significantly.

1. By Voluntary Donations

There are certain times we all want to contribute a good amount of money for a cause. The reasons are endless, even if we don’t need a reason to do good to others.

Through the ITA Section, 80G, any contribution towards the relief or charitable trust through any person, company, or organization can be claimed for deduction.

2. Invest & Reduce Taxable Income

Some investments like a term insurance can give you a tax rebate under section 80C deductions. This investment can be deducted from your taxable income. Those investments fall under the EEE category in which the taxpayer does not to pay tax on investment or its returns within certain government-applied criteria.

3. Availing Health Savings Accounts (HSAs).

It also falls under the employee benefits scheme. The high deductible health plan (HDHP) will cover up all the medical expenses and help in saving taxes. By contributing to HSA, a person can save for other costs that are not covered by the health plan. You can visit the official IRS website to learn more about it. Other advantages of HAS are:

• The money added in this process isn’t taxed.
• The amount can be used in retirement as well.
• The accounts grow tax-free.
• There’s no tax applicable on withdrawals for genuine medical expenses.

4. Invest In Tax-Saver Deposits

It’s a popular way to invest wisely. A person registered with internet banking can easily utilize it. The first step is to open a five-year tax-saver fixed deposit account and save some funds in it. The fixed deposit receipt is the proof for claiming tax benefits. By Section 80C, the tax benefit has exemptions up to Rs 1.5 lakh. Connect with your bank for more information as many banks don’t allow this facility.

5. Investing In Rajiv Gandhi Equity Saving Scheme (RGESS)

Under the Rajiv Gandhi Equity Saving Scheme, If a taxpayer has an annual income of lower than 12 lakhs, he can avail additional tax deduction benefits under Section 80CCG. Through this scheme, he can invest in specific companies’ shares and mutual fund’s plans. It’s a complicated scheme, and the deduction is only available for the first-time investor.

Get better income tax planning insights and assistance, consult experts like InsideTax. They are a team of professionals who can help in tax planning, financial auditing, and other corporate issues.