Tax Saving Tips: Do not wait for the last date to file income tax return and file your ITR by 31st July 2022, the last date for filing this year’s income tax return. You can avail exemption of up to 1.50 lakh under Section 80C of the Income Tax Act and you can save tax on investments in various tax saving schemes. You can reduce your tax liability by taking advantage of the deductions available under various sections of the Income Tax Act.
Some of the major schemes are as follows-
Tax Saving Mutual Fund
Under Section 80C of the Income Tax Act, an exemption of up to Rs 1.5 lakh is available on investing in it. The lock-in period of this mutual fund is 3 years i.e. before that you cannot withdraw money from this scheme. Investing in this is not only a good way to save tax but also the best way to get more returns than inflation.
There is no risk involved in investing in Public Provident Fund (PPF). In this, there is a guarantee of the government on investment. It has a lock-in period of fifteen years. At present, the return on investment is 7.1 percent, which is slightly higher than inflation. You can invest a minimum of Rs 500 and a maximum of Rs 1.50 lakh in PPF annually, which is exempted under 80C.
Tax Saving FD
This investment option is suitable for investors who want to save tax with the safety of money. Tax Saving Fixed Deposit (FD) has a lock-in period of 5 years, in which you can get tax exemption under 80C on the investment. However, the interest earned on this is treated as ‘income from other sources’. Therefore, it is taxed according to the slab.
NPS is a voluntary and long-term investment plan for retirement. The lock-in period of the National Pension Scheme continues till retirement. In this, tax exemption is available on investment up to Rs 1.5 lakh under 80CCD (1). Also, if you make a voluntary contribution of Rs 50,000 after the limit of Rs 1.5 lakh under 80CCD (1B), then additional tax exemption can also be available.