If you want to save tax, then these saving tips will be useful for you.| How to save Income Tax?

 

If you want to save tax, then these saving tips will be useful for you:

 

You too must be in a rush to invest to save tax. March 31 is not far away, but you need to know all their pros and cons before investing money. This includes the lock-in period, conditions for premature withdrawal, interest, and tax on the maturity amount. Tax on the return of your money is an important factor.

 

Especially if you fall in the high tax bracket, then this thing becomes more important. The returns you get are included in your income and hence you are taxed more. In such a situation, investing in tax returns helps you a lot in saving overall tax. In old tax redemption, you get the freedom to get tax redemption and exemption.

 

Now if you find old tax redemption beneficial for you, then you should find such tax-saving options where you will get more benefits. We will tell you about five such tax-saving options on whose returns you will not have to pay any tax. First comes the Public Provident Fund or PPF. Investment in PPF is tax exempted. It has got Exempt Exempt Exempt or EEE status.

 

This means that you do not have to pay any tax on the interest earned and the maturity amount. This is called the guarantee of the government. With this, your money invested in it remains completely safe. PPF has earned 7.1% interest for the quarter ending March 31, 2023. However, it has a lock-in period of 15 years. In this, you can invest from ₹ 500 to 1.5 lakh rupees annually.

 

The second scheme is Sukanya Samriddhi Yojana i.e. SSY. It is specifically brought under the Beti Bachao Beti Padhao scheme or a deposit scheme for the girl child. Parents can add money through this scheme for their daughter's education or marriage and also get tax benefits on it. Like PPF, Sukanya Samriddhi Yojana also has a status.

 

It also has a government guarantee and your money is completely safe. For the quarter ending March 31, 2023, a 7.6% interest rate is being offered on the scheme. The lock-in period for this is 21 years. In this, a minimum of ₹250 and a maximum of ₹1.5 lakhs can be deposited annually. Parents can maintain this account till the child is 18 years of age. 

The third scheme in this series is the covered salary under EPF and VPF, Employees Provident Fund which in this case 12% goes to the EPF account. The employer also invests the same amount in it. Employee's contribution is entitled to tax under this. Along with this, you can also do VPF. This is Voluntary Provident Fund and both are the same. 

The government has not yet announced the interest rate on this for 2022-23. This interest rate has been kept at 8.1% for the last financial year. The lock-in is till the age of retirement. EEE tax status in EPF is available with certain conditions. 2021-22 if an employee's contribution exceeds ₹2.5 lakhs per annum, then the interest received on the excess amount will be taxed. 

Now it comes to ELSS i.e. tax saving is called Equity Linked Savings Scheme or ELSS. These come under the category of equity. Its biggest advantage is that it has a very short lock-in period as compared to other tax-saving instruments. ELSS has a lock-in of three years. In this, if you take the option of a dividend, then you will have to pay tax on it. 

If your capital gain from shares and equity is more than ₹ 1 lakh, then capital gains tax will be levied on it. In such a situation, you can say that if you look for an ELSS growth option then you have EEE status. You talk about the fifth option. This is because life insurance is also tax exempted under 80c of the life insurance policy.

 

This includes term plans, unit-linked insurance plans, and traditional insurance policies. The tax you save is equal to the premium you pay. However, there are a few things to remember while taking life insurance policies. Term insurance is the cheapest for you. Both investment and protection are available in ULIPs and other traditional policies. 

In this case, their premium is high. ULIPs have premium returns of 15 to 20 years. Also, Lockin's period is five years. You can withdraw money after this lock-in. ULIPs have to pay ₹ 2.5 lakh annually in premium tax. In traditional policies, the age of the person is based on the sum assured and the policy. In this case, the tax benefit is available on the premium and the maturity amount is taxed subject to conditions. 

The 2023 budget states that the premium paid in a financial year for all life insurance policies, except ULIPs, if it exceeds 5 lakhs, will be taxed. This rule will be applicable from 1 April 2023. So there are five options with tax returns that you will no longer have any doubt on this issue and you will be able to do your tax planning in a much better way.

Hope you will like this information related to tax instruments. If you have any questions in your mind then please comment on our site www.tradeipohub.co.in. Thanks for reading.