Year-End Tips to Save Money & Income Tax

The end of every financial year brings a lot of worries to the earning members of every family. Everybody wants to save their hard-earned money as much as possible from income tax.

Thus, it is always advisable to chalk out your investment and saving plans beforehand. A wise saving plan can really help you to lower your taxable income and provide you smart tax deduction opportunities.

Great Income Tax Saving Tips at the End of this Financial Year

It is necessary that you should plan your savings and income tax early every financial year. However, if you still do not have a good plan to save your money and income tax, here is some year-ending income tax saving tips that could be beneficial for you at the end of this financial year:

Ø  Tax saving up to 1Lakh and 50thousands within Sec. 80C: 

you can lower your taxable income by making investments eligible to Sec. 80C tax deduction option. Various options under this section of income tax act are -

o   Public Provident Fund – 

you can save up to 1, 50,000 rupees in PPF or Public Provident fund every financial year. This not only qualifies to tax deduction but also a profitable investment plan for future savings.

o   Employee Provident Fund – 

it is important to know for a salaried person that the money deducted from salary as EPF is also subjected to tax deduction under this section of income tax law.

o   Life Insurance Premiums – 

the premiums paid by you for various life insurance plans bought for you and family are also subjected to tax deduction. You can mention these expenses for tax consideration.

o   Investments in ULIPs – 

the investments made in unit-linked insurance plans enjoy a good amount of tax deduction under this section of Indian income tax act. The ULIP investments made for you, your wife or children are eligible for tax consideration.

o   National Saving Certificates – 

investments in NSC schemes is yet another tax beneficial choice public sector investment plan that allows you to enjoy tax consideration under Sec. 80C.

o   Fixed Deposits – 

investing your money in 5yrs fixed deposit schemes offered by various public banks and post office are also qualified for tax deduction.

o   Sukanya Samriddhi – 

this public sector investment plan offers you to save up to 1lakh and 50 thousand for your girl children, maximum for 2 girl children.

o   Other Important Income Tax Saving Tips – 

apart from these effectual saving and income tax benefit investment options, there are still other efficient ways to save your money. Home loan payments made by you also provides a great tax exemption opportunity. The fees paid by you for your children’s education are eligible for tax deduction.

Ø  Tax Beneficial options at the Closing of Fiscal Year Beyond Section 80C:
o   NPS – 

this is New Pension Scheme which allows you to save beyond the employee contribution amount. It allows you to save an extra 50 thousand rupees, provided employee contribution receives exemption up to 10 percent of the total salary.

o   Benefits on Home Loan Interests and House Rents – 

tax deduction of maximum 2Lakhs can be availed if the possession of the property or the construction of the property is accomplished in 5yrs of taking loan; countdown begins at the closing of the fiscal year in which the amount is loaned. Besides you can also claim a tax deduction on the amount of money you pay as rent.

o   Education Loan Benefits – 

the interest you pay for education loans, be it for you, spouse or children, receive a tax deduction within Sec. 80E. There is no limit on the deductible amount.

o   Income from Savings Accounts – 

the earnings from the interests of the saving schemes of banks and post office also permit tax deduction maximum 10 thousand rupees.

o   Premiums Paid for Medical Insurances – 

the amount of premiums you pay for yourself, wife and children are eligible for tax benefits within Sec. 80D. You receive an extra deduction of 25 thousands if you are liable to pay the insurances of your parents too. However, you receive 30 thousand reductions if your parents are above 60 years.

o   Tax Benefits on Treatment of Certain Diseases – 

expenses made for you and your dependants due to the treatment of neurological diseases, AIDS or malignant cancers receive benefit of 40 thousand rupees if the person is below 60yrs, 60 thousand rupees if the person is above 60yrs and 80 thousand rupees if the person is above 80yrs old.

o   Disability Benefits – 

tax benefit of 75 thousand rupees can be claimed for the expenses made on rehab, treatment and training of self, wife or children. This amount of disability benefit can increase up to 1lakh and 25 thousands at severe disability.

o   Tax Benefits on Donations – 

any amount of donation, not made in cash, is subjected to tax deduction. This deduction could be 50 percent or even 100 percent depending on the institution you donated to and the sum of donation you made.