Income Tax

6 Things to Start Doing Now to Save Taxes This Financial Year.

As we all know that a couple of months left in this financial year and this is the time to calculate and plan for investment to save taxes. Here we are discussing 6 investment plans to save taxes this financial year.

Whether you are a faithful taxpayer or a first-timer, if you haven’t been planning your taxes, you will end up paying more tax than you should. When only a couple of months are left for April 1st, the informal tax-saving season is already here when both salaried and non-salaried taxpayers start going through the tax-saving investment options for fiscal 2018-19.

As a good investor, you would be looking for investment options that not only help you save tax but also generate tax-free income. Often income tax laws appear so difficult that paying income tax at the end of every fiscal becomes challenging for many people. Opting for the right tax saving plans includes numerous factors, like safety, liquidity, and returns. When there are tax-saving tools existed, it is not fair to let your employers drain plenty of money as TDS from your salary.

How to save income tax in India 2018-19?

  • By Opting Saving Plans

Traditional savings cum life insurance plans – a saving cum safety-oriented traditional life insurance plans fall in this category. Saving plans not only backing you financially by assuring returns in the form of regular pay-outs but also comes with tax advantages on all premiums paid and pay-outs. High earnings often come with high threats. However, saving plans are one of the secured ways to let your money grow. It gives you an assured regular stream of income. Other perks of saving plans include – assured benefits (if all the due premiums are paid) and instant guaranteed pay-out in case of loss of life, thus combining the life insurance and investment delivering the best protection net for your family.

Term insurance plans – the cleanest form of life insurance is the best way to secure the life goals of your loved ones. Section 80C of the Income Tax Act 1961, allows an exemption for life insurance premiums up to Rs. 1.5 Lakh per annum and so a term plan is entitled to the tax deduction. Unpleasant shocks are part and parcel of life, and a term plan enables you to stay prepared for unpredictable incidents.

A security-oriented life insurance plan, for example, Aviva i-term smart is packed with multiple advantages and is the cheapest term plan in the market:
· Serious illness and disability rider – Covers 16 critical illness & permanent total disability due to illness or accident and helps you lift your existing plan.
· Sum assured – (Min 75 lakhs to 25 crores) In case of unfortunate damage of life of the insured.
· Option to increase base sum – Give policyholders a chance to stretch the level of protection with an increase in financial accountabilities.
· Flexibility to choose premium frequency – We have an option to choose our plan as per our financial stability. From yearly, half-yearly to monthly.

  • Health Insurance Plans

Afterlife insurance, health insurance is a smart plan that every person should have in his/her collection. Just like life insurance, health insurance plans serve as an effective tax saving scheme. In addition, with the medical benefits of health insurance, a health insurance plan cuts a taxpayer’s annual income tax liability to the premium paid. Also, it also makes you entitled to income tax exemption for a premium paid for not only the insurer but also his/her family and parents. The upper limit for the deduction paid from the taxable income is Rs. 15,000 and it may be the extent to 20,000 for senior citizens. If you are already covered with a policy provided by your company, you can improve it with suitable plans, for e.g. Aviva Heart Care – the only insurance policy in India dedicated to the heart and covers both you and your spouse. It is a non-linked, non-anticipating health insurance plan that covers 19 heart situations and also offers loss of income. Other benefits of this plan are – fixed pay-out regardless of the cost of treatment, multiple claims under a single insurance policy and double the coverage with you and your partner sustained coverage with waived premiums.

  • Equity-Linked Savings Schemes (ELSS)

Equity-linked savings schemes come with assured features – first, investment amount qualifies for tax benefit up to a limit of Rs. 1.50 Lakh a year and second the amount invested has a lock-in period of 3 years.
The lock-in period of a mutual fund is lessor if compared to fixed deposit and PPF. However, it offers a huge return on investment.

  • Unit-Linked Insurance Plans (ULIPs)

Unit-linked insurance plans are a good mixture of investment and protection under a single plan. Financial investments done under ULIPs are eligible for an income tax deduction. It not only let your money raise but also comes with multiple eye-catching features, like – multiple fund options with changing asset allocation between equity and debt, policy terms, waiver of premium, etc.

  • Public Provident Fund Scheme (PPF)

The public provident fund (PPF) scheme has one of the reliable saving avenues for Indian investors and still has credibility. Though PPF offers an 8.0% (currently) interest rate, it offers a huge taxable revenue. A PPF account can be opened with a minimum amount of Rs. 500 and the maximum amount that can be deposited in a fiscal is 1.5 lakh. Public Provident Fund is a long scheme with a lock-in period of 15 years.

Being an accountable citizen, you must pay taxes. But, you should not pay more tax than you should. Several tax saving schemes enable you to save more tax than you can imagine. Start using them and enhance your tax
life.

Resources: Direct taxation Module, ICAI 2019.

 

TaxClue Team

Taxclue is an online news portal for reporting all news, articles, judgments, Circulars, orders, and notifications relating to various corporate and tax laws in India. We use the tagline ‘Simplifying Laws’. Our mission is to Simplify the Laws and make people aware of their rights and duties in relation to tax matters in order to equip them to participate in nation-building. TaxClue is a team of young professionals. We started in December 2016 with the mission of knowledge sharing. TaxClue would like to hear your valuable suggestion. Please write to our editorial team at [email protected]

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