Filing taxes is quite a tedious and daunting task for many people, especially first-time taxpayers. In the process, many realise that making investments will help them save more on tax. Therefore, having a few last-minute tax-savings investment options is a must.
We have enlisted five tax-saving options that will allow you to save money on tax with ease. Let us begin.
- Investments under Section 80C
Anyone filing their taxes based on the old tax regime knows about the investments under Section 80C. As per the law, you can claim tax deductions of up to Rs. 1.5 Lakh on the investments made in term insurance plans, ULIPs, Public Provident Fund (PPF), Fixed Deposits, etc. These investment instruments not only help you secure yours and your family’s financial future but saves your tax as well.
However, when choosing the type of investment for saving tax, select only the ones you think will help you fulfil your financial objectives. Also, you should be able to have quick access to the amount invested in these instruments in case of any financial emergency. In fact, most of these options can be purchased online within a few minutes.
- Health insurance investments
Another tax-savings instrument is the health insurance plan. The premiums paid towards health insurance can be availed for additional tax deductions under Section 80D of the Income Tax Act. This section offers deductions of up to Rs. 25,000 for salaried individuals and up to Rs. 50,000 for senior citizens.
On the other hand, if you have a term insurance plan with critical illness benefits, you can avail the tax benefits under Section 80D. However, critical illness is a rider benefit of term insurance, and you will have to pay additional premiums when you opt for it. You can use the term insurance calculator to determine the premiums charged on the policy based on the chosen coverage and rider benefits.
- Savings under Section 10(10D)
When you invest in life insurance plans, the maturity/death benefits received are tax-free under Section 10(10D) of the Income Tax Act. However, there is an expectation to it. Death benefits are exempted from tax for policies availed after April 01, 2012, and the total premiums amount is less than the full sum assured amount.
But for policies availed before April 01, 2012, then the premium expenses should be less than 20 percent of the total sum assured to be eligible for tax benefits under Section 10(10D).
There is no limit on this amount, and the transactions need to be made through banks.
For cash donations, the exempt amount is up to Rs. 2000, and these donations need to be made under registered charitable organisations to avail the said tax benefit.
- Expenses incurred towards the treatment of a disabled individual
- It is Rs. 75,000 for 40-80% disability and
- It is Rs. 1.25 Lakh for 80% and above disability
Note that these claims can only be granted to the family members of disabled individuals.
These are a few tax-saving options that you can consider when filing your taxes this year. Just remember that when looking for tax-saving investments, find plans that secure the financial future of your loved ones in your absence and allow you to build your wealth over time.