Tax saving is one of the integral parts of planning finances and a good strategy to save taxes can also help to have a good financial plan and save more taxes while following that plan.
Tax saving schemes
1) Life Insurance:-
Although it cannot be termed as a scheme which is meant for tax saving alone, yet it can be used to serve this purpose.
According to the Income Tax Act, the amount of premium which is due for the insurance plan can be withdrawn from the total social income and hence it can prove to be useful in reducing the amount of tax payable. But it’s highly recommended to Compare Life Insurance Policies from different sources before you decide to buy one.
2) Public Provident Fund:-
Public Provident Fund is one of the best schemes which is introduced by the Central Government and can be utilized for tax deductions.
In this scheme, an individual can make a contribution towards the fund which is not inclusive while calculation of taxes.
The plus point is that the interest obtained on the contribution is tax-free.
3) Health Insurance:-
Along with ensuring the well-being of an individual and his family, health insurance can also be employed as a good strategy to lower the amount of tax payable.
The amount of premium which is paid for social health insurance are tax deductible as well and can be used as a good form of investment in saving tax.
4) National Pension Scheme:-
This scheme can ensure that you have a safe and comfortable retired life and gives an opportunity for reduction in tax amount.
The amount of money which goes as a contribution towards National Pension Scheme is tax deductible, but it can only be accessed after the retirement of an individual.
5) ELSS Funds:-
The Equity Linked Saving Scheme or ELSS have great potential as well as lucidity when it comes to tax-saving.
They are specifically designed to serve the social purpose of tax saving.
It is an equity based scheme and it has a lock period of only three years.
Pros:-
- They can be employed to save taxes efficiently.
- The interest on each of them is tax-free.
- They help to plan an individual’s finances.
- Helps to enjoy the maximum social savings.
- They help to encourage people to save as well as make an investment for their future.
Cons:-
- Some of the social schemes in investment strategies may lead to low returns.
- Proper planning before any investment is required.
