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Top tax savings methods in India - HDFC Life

October 23, 2018 1506

Often, many of us don’t feel too good about the fact that the taxes cut into our pockets and deplete our hard-earned money. Saving income tax on the taxable income is one of the prime ways of efficient budgeting and saving money. A healthy budgeting ensures that you stay financially responsible and always spend carefully. Planning of taxes in very important as it ensures that you don’t end up paying more than what you should. The taxation mechanism is quite complex and often, if you don’t plan well, you cannot be sure of any tax savings. Therefore, it is very important to stay ahead with better knowledge about tax savings. There are several methods by which you can ensure tax savings. Certain important ones are mentioned below:

  1. Deduction on rent paid (without HRA): As per the provisions of Section 80 GG of the Income Tax Act, tax benefits under house rent allowance (HRA) are covered.
  2. Home Loan Repayment: Your home loan EMIs can reduce the burden of taxes. You can get the benefit on both principal & interest component of your installments. If you are paying for your first house then you can save even greater amount of tax. All these deductions are covered under section 24, section 80C and section 80EE.
  3. Education Loan Repayment: Like the deduction available on tuition fees, your education loan EMIs also bring tax benefits to you. Income Tax Act has separate provision under section 80E to provide you this tax benefit for interest paid on your education loan.
  4. Employees Provident Fund (EPF): The contribution that you make to your EPF or PF account can be claimed as deduction under section 80C. The interest income & maturity amount that you get as a result is also exempt from tax if you have completed 5 years of service.
  5. NPS: Considered to be a secure option, this postal department saving scheme makes you eligible for section 80C deduction. Though interest earned is taxable, it also qualifies for deduction under section 80C.
  6. Sukanya Samriddhi Scheme: It offers higher rate of return on investment when compared to PF & PPF. However, this scheme is only available to parents or guardians of a girl child.
  7. Charitable donations: Charitable donations (capped at Rs.2000) make you eligible for tax exemption which is covered under section 80G.
  8.  Donations for scientific research or rural development:
    Any donation made for scientific research or rural development is eligible for deduction under section 80GGA of the Income Tax Act.
  9. Tax Benefit on Gratuity: Gratuity received on retirement or on becoming incapacitated or on termination or any gratuity received by the widow of the deceased employee, children or dependents is exempt up to Rs 10,00,000 (proposed to be enhanced to Rs 20,00,000)  subject to certain conditions.
  10.  Investing in ULIPs: If you have excess cash, you can invest it by using the top-up facility provided by ULIPs. You can avail tax benefits if the premium paid in this case is below 10% of the sum assured. This is possible through Sections 80C and 10D of the Income Tax Act. To sum up, ULIP gives you three-in-one benefits.

HDFC Life offers HDFC Life Click 2 Invest ULIP – a unit linked plan that provides you market-linked returns and financial security. For more details, please click on the mentioned link: https://www.hdfclife.com/savings-plans/sanchay-plus

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Healthy budgeting: Top tax savings methods in India

HDFC Life Insurance Company Limited. CIN: L65110MH2000PLC128245, IRDAI Reg. No. 101.

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