“In this world nothing can be said to be certain, except death and taxes”. By Benjamin Franklin
But all of you need not to be discouraged as there are many ways around to save from the trap of taxes and enjoy the maximum savings possible.
Most of the tax saving options is available under section 80C. There are less than 31 working days to complete the tax saving exercise for the FY 2019. because 31st march is coming on Sunday. And in case you haven’t finished the tax saving for the financial year 2018-19 then have a look at your current commitments and also certain expenses which were made in the FY 2019.
Usually, investors make one mistake that they choose an investment just to avail the tax benefits. Investors should look for four factors while making an investment that are maximum tax savings, low cost of investment, minimum risk and substantial returns. Under section 80C, a person can claim a deduction of Rs.150000 from the total income. These deductions are only allowed to an individual or a Hindi Undivided Family (HUF).
There are seven tax saving options which will help you to save tax before making any new commitments.
1)Employee Provident Fund (for salaried individuals):
Under EPF certain amount is to be contributed by an employee and equal amount is to be contributed by an employer. Normally, employee contributes 12 percent from their basic salary. Calculate the total amount which you have paid or contributed in EPF for the FY 2019 to get the tax benefit. Remember that the employer’s contribution is not allowed under section 80C.
2)Equity Linked Saving Scheme(ELSS):
ELSS is a type of mutual fund which invest mostly in equity markets. Investments which are made under ELSS are tax deductible under section 80C. There are two methods to invest in ELSS that are through Systematic Investment plan(SIP) or lumpsum. If a person wants to invest now in ELSS than it is advisable to invest through lumpsum method to get the tax benefit. It is the best investment option to get tax benefit and desired returns.
3) Home loan EMI’S (principal repaid):
Home loan EMI’S consists of both principal repaid and interest paid. In the start, principal amount which is paid by a person is less but still it is qualified for a tax benefit under section 80C. A person can ask his lender to give him a tax certificate showing a break up of interest and principal paid. Even if you have closed your home loan by paying all the dues it is still qualifies for tax benefit under 80C.
4) Home loan EMI’S (interest paid):
Interest portion of the EMI’S can be deducted under section 24 of the income tax under the heading of ‘income from house property’. Maximum deduction allowed in this is Rs.2 lakhs per year. Only if you have possession of the house.
5) Children’s tution fees:
the parents can claim deduction for tution fees for maximum of two children’s. In this the parent who pays the tution fees of a child will get tax benefit and not both the parents.
6) National Pension Scheme (NPS):
NPS is a saving scheme in this employee makes certain amount in this FY. To keep the NPS active a person has to keep Rs.1000 in his account. To get higher amount in future, contribute more.
7) Health Insurance Premium:
If a person is having a health insurance premium, the renewal of the premium will also qualify for a tax benefit under section 80D. Also it will help a person if he keeps his policy active as it will help him in the future.
8) Life Insurance Premium:
If a person is having life insurance policy of any nature whether it is pure term insurance or ULIP. And if a policy is lapsed than he can pay the remaining premium and get the tax advantage.
These were some of the tax saving instruments. You can use any saving scheme from the above to save tax before the year ends.