Recommended methods of saving taxes under Sec 80C & 80D
- Make an investment of Rs 1.5 Lakh under Sec 80C to decrease your taxable income
- Subscribe for a Medical Insurance & claim a deduction.
- Claim deduction up to Rs 50,000 for residential loan interest under Section 80EE
Investment options under Sec 80C
The most popular tax-saving options available to individuals in India are under Section 80C of the Income Tax Act. Section 80C includes several investments and expenses that can be used to claim deductions. The limit of Section 80C is ₹ 1.5 lakh in a financial year, which means that you can use this full amount to reduce your taxable income.
Other Tax Saving options beyond Sec 80C
In addition to the deductions available under Section 80C, there are other deductions from Section 80 that can also be claimed to save on income tax. These deductions include health insurance premiums, tax benefits on mortgage loans.
- Buy medical insurance and claim a deduction of up to Rs. 25,000 (Rs 50,000 for seniors) for the health insurance premium
- Claim the deduction of up to Rs 50,000 in mortgage loan interest under Section 80EE
- A mortgage loan would also help you reduce your taxable income, since the principal part of the mortgage loan can be claimed in accordance with Section 80C up to Rs 1.5 lakhs and the interest portion can be claimed as a deduction from income of the property
Know about tax-saving investments for the year
The best time to start planning your tax savings investments is at the beginning of the financial year. Most taxpayers delay until the last quarter of the year and end up making hasty decisions. Instead, if you plan at the beginning of the year, you can make investments that can also help you meet your long-term goals. Investments that save taxes must also be used to create wealth, not just to save taxes.
Use the following notes to plan your tax-saving :
- Check the tax savings expenses that you are already doing and that you can claim. This includes expenses such as the insurance premium, children’s tuition fees, the contribution of EPF, the repayment of mortgage loans, etc.
- Deduct this amount of ₹ 1.5 lakh to calculate how much to invest. It is not necessary to invest the total amount if the expenses cover it.
- Choose investments to save taxes based on your goals and your profile. ELSS, PPF, NPS funds and fixed deposits are some of the popular options.
In this way, you can find out how much you need to invest to save taxes. It is better to start investing in the first quarter of the financial year so you can distribute the investments throughout the year. Doing this will not be a burden at the end of the year and will also allow you to make informed investment decisions.