The financial year is coming to an end and it’s time to submit proofs for all the investments declared for the year. Lot of us declare certain investments but fail to actually invest causing in extra tax deduction towards the end of the year.
Paying tax is good but our Government has provided certain provisions that can help us to save on tax and increase our net take home salary. So if your Government is provisioning tax saving measures, it is in our best interest to save some of that.
Let me tell you some easy measures that can help you save on your tax this financial year:
- House Rent Allowance – If you are staying on a rental accommodation, don’t fail to submit your house rent receipts. The amount allowed for tax exemption is based on the basic salary component of the CTC. The rent receipts can be purchased from any stationary shop. And obviously we need to ensure we aren’t submitting any fake receipts.
- Home Loan – Home Loan incurs a lot of interest on the principal amount but also aids in saving tax. You can claim tax benefits of upto 2 lac on the Interest Amount you are paying each financial year. So if you are in 30% tax bracket, you can save almost Rs 5000 each month.
- Provident Fund – This is, by law, a part of CTC and gets deducted without fail each month. This amount is exempted under section 80C for which the max limit is 1.5 lac.
- Public Provident Fund – If your PF is not enough to cover the 80C limit, you can push out some extra amount in your PPF account. One big constraint I personally find in this scheme is that the invested money is stuck for the next 15 years. Hence, this one is off my list.
- Mutual Funds – Investments in MF is one of the best investments I’ve made so far. For all these tax saving schemes, there is some lock out period. The benefit in this case is that the lock out period is only 3 years (against 5 years for the Fixed Deposits). Also, if you invest wisely, the amount gets really good returns.
- Tax Saving Fixed Deposits – This one is quick and easy with a lock out period of 5 years and a decent and risk free return.
- LIC Policies – This is again a safe and secure fund by the Government where you get good interest on the invested amount but again the lock out period is minimum 15 years.
- Mediclaim Policies – This is covered under section 80D and allows tax exemption for any medical policies purchased for self, spouse or children.
There are several other ways you can save on your tax like National Pension Scheme, Education Fees for children, Education Loan, Donations and Charity, etc. Claim all the benefits you are entitled for!