The Basic Guide on How to Save Taxes in 2017
It’s a known fact that tax saving needs to be done regularly throughout the year. Thanks to the busy schedule of juggling work and responsibilities of home, though, a lot of us push it forward to the last few months of the financial year. With a heavy load saved till the end, and the clock ticking towards the end of the fiscal year, there is going to be a lot of pressure.
Here’s a list of tax exemptions that you should consider when you calculate tax benefits and help optimise your financial management.
Tax Exemptions on Investments
You can claim an exemption of up to Rs. 1.5 lakhs under the account of Section 80C for the following investments:
1. Fixed Deposits
The most common choice of investment in our country, Fixed Deposits have several benefits—tax exemption being a major advantage. You can save on this tax by smart investments by splitting and laddering your FDs and also by submitting Forms 15G/15H.
2. Equity Mutual Funds
If you’re looking for an investment with a higher return, perhaps in stocks or similar financial instruments, equity mutual funds are a great choice as they have a smaller lock-in period of three years. These equity linked saving schemes help your money grow while also saving taxes.
Unit Linked Insurance Plans are an insurance scheme that allow you to invest in equities along with an insurance that grants you a tax exemption.
4. Sukanya Sumriddhi Scheme
This is a scheme dedicated to the benefit of a girl child. The scheme allows you to claim a tax deduction if you have invested in a child below 10 years of age.
5. Provident Funds
In a public provident fund, you can invest anywhere between Rs. 500 to Rs. 1.5 lakh for a lock-in period of 15 years. The employees provident fund is the deduction of a small amount made in your salary every month. Both these funds are eligible to a tax deduction.
6. National Payment Scheme
This another popular scheme of investment that helps in the exemption of tax of up to Rs. 1.5 lakh under Section 80C. An additional contribution of Rs. 50,000 can extend your deduction upto Rs. 2 lakh.
Tax Exemptions on Payments
1. Home Loan
With a Home Loan eligibility, you are also entitled to a tax exemption when it comes to Home Loans. You can claim up to Rs. 1.5 lakh under Section 80C. If it is a self-occupied home, you can extend the exemption to up to Rs. 2 lakh. You can also avail an exemption on your Joint Home Loan.
Life insurance schemes, whether from a private insurance company or from the Life Insurance Corporation are exemptible under Section 80C. Similarly, medical insurances also give you the benefit of tax saving. You can claim up to Rs. 25,000 against the premium paid for you and your family.
If HRA and LTA are a part of your salary, you can claim an exemption on accommodation and travel charges respectively. The HRA is applicable only if you reside in a rented home.
4. Tuition Fee
The tuition fee paid at a school or university is also tax-exemptible under Section 80C.
With these payments and investments in mind, you can now claim exemptions and get your finances sorted. Optimise your tax deductions and bust your woes on how to save taxes in 2017.