Tax savings & some of the best ideas to create your plan

An annual income earned by an individual is subject to tax as per the Income Tax laws of the country. In India, the income tax rates are different for an individual based on his or her age and annual income levels. There are many ways by which one can save on income tax by investing wisely in various mutual funds, bonds, securities, policies etc.

Life insurance are one of the best tax savings plan to avail maximum benefits by saving your hard earned money from being deduced in government taxation. To extract maximum tax benefits, people have to invest in different insurance plans, i.e., Life Insurance, Pension and Health. Premiums paid towards these insurance plans reduce your taxable income which will eventually help you save money. Besides, investment in polices also help you get tax benefits on the maturity amount or returns from insurance plans.

As the financial year end comes nearby we all rush to file income tax returns. However, it would be wise if we check some of the best tax savings plan options that can help us earn more money.

Life Insurance:

•Premiums paid for all life insurance policies are exempt from tax up to a maximum of Rs 1.5 lakh under Section 80C of the Income Tax Act, 1961. Also, the claim amount received by the beneficiaries or bonus in the hands of the policyholder is tax free under Section 10 (10D) of the Income Tax Act.

•Market linked- insurance policies that provide the combined benefits of insurance and investment help you save taxes uptoRs 1.5 lakh for premiums paid towards these plans.

•For retirement plans, Section 80CCC of the Income Tax Act provides an exemption of up to a maximum of Rs 1.5 lakh for premiums paid towards pension plans.

•For family health protection people often buy medical insurance policies which can be used for tax rebate during financial year end. One of the best tax savings plan, health policies provide double benefits as the premium paid on medical insurance policies upto Rs 25,000 for individuals upto 60 years and Rs 30,000 for those above 60 years is available as a deduction under Section 80D. At the same time even preventive checkup costs upto Rs 5,000 are covered.

PPF

This tax saving plan is for the few people who want to get the tax deduction under Section 80C while investing and after that exemption on interest earned as well as the maturity amount. The limit of yearly investment is upto to Rs.1, 50,000.

ELSS

ELSS is kind of mutual funds which can also help you build best tax savings plan as well to save your hard earned money. It is one of the most popular Section 80C investments wherein investors enjoy both the benefits of capital appreciation, as well as tax benefits upto 1.5 lakh.

Some other tips to create your best tax savings plan:

•When staying in your parents’ house pay rent and claim it under HRA to save tax

•By donating to charitable trust, you can avail tax deduction under Section 80G

•Expense incurred towards your kids’ tuition fee can be availed for tax benefits under Section 80C. Also, there is section 80E under which you can claim deduction against the interest paid on education loan

•For stamp duty and registration expenses incurred in house property you can avail tax benefits under section 80C