How to save income Tax in India? Best Ways to Save Income Tax in India

Best Ways to save Income Tax in India

Saving income tax is very essential in one's financial management. While it's our duty to pay income tax, we should also make sure that a portion of our income is usefully invested for the sake of tax-exemption, thereby benefiting both the individual and the nation

If you are looking to invest your money in order to save income Tax, you should choose the right tool in order to ensure that it suits your needs and also save income tax. For example, young investors should look to invest in long-term plans whereas older people should invest in short term plans. Also, make sure that your investment is proportional to your income. Too much investment for the sake of tax exemption may cause essential money to run out of your hands. So, while investing for the sake of income tax exemption, make sure that you choose the right investment tool.

Section 80C of the Income Tax Act allows certain investments and expenditure to be tax-exempt. The total limit under this section is Rs. 100,000 (Rupees One lakh) which can be any combination of the below:

Provident Fund

Public Provident Fund

Life insurance premium

Pension plans

Equity Linked Saving Schemes of mutual funds

Infrastructure bonds

National Savings Certificate

Besides the above, the following investments/expenditure are also subjected to Tax-exemption

Public Provident Fund (PPF)

National Savings Certificates (NSC)

Post Office Scheme (POS)

Kisan Vikas Patra (KVP)

Life Insurance Plan

Investment in Pension Plans

Home Loans/Education Loans

Investment with Banking Institutions

Housing Rent Allowance

Tuition fees of full time education for 2 children

ELSS of Mutual Funds

Investments in Bank Fixed Deposits for 5 years

Dividends

Charity contributions

For further details about rules/regulation converning Income Tax exemption, check out the official government website www.incometaxindia.gov.in