Introduction
One of the things that many people do not know is that, the government is offering tax-saving investments to both categories of people, firstly those who are salaried and next, those who are self-employed. So, that they can save on taxes. Besides all of that, people also have the opportunity to have tax exemptions and tax deductions, which can assist you in saving the money & lessen your tax liability. You can check out the 80C of the Income Tax Act, 1961 to know more about it. Also, you can check how much should i save for taxes to broaden your horizons for the same.
How Much Tax Deduction You Are Eligible
An individual is eligible for a tax deduction of up to Rs.1.5 lakhs annually, under section 80c of the Income Tax Act. It is applicable for suitable investments and expenses. Besides all of that, you can claim deductions under section 80c on investments in specific post office schemes, NPS, NSC, tax-saver FD, ELSS, VPF, EPF, SCSS, PPF and so on. Further, if you are paying premiums on life insurance, then you also get deductions for the same. And, on principal payment on home loan, you get deductions. Plus, you can also claim deduction under section 80c for various spending activities like tuition fee for up to 2 children in full time course, and stamp duty and registration cost of a home during the buying process.
Important Obligations
Moreover, there is an important obligation which you should follow, if you want to get the benefit under section 80c. The investments should be in a lock-in period, during which you cannot withdraw the investments. For instance, ELSS has a 3-year lock-in period. Plus, you will also see that a PPF has a 15-year lock-in period during which you cannot withdraw the amount invested. You can also choose the investment which has the lowest lock-in period. But it mostly depends on your investment goals.
Use Tax Calculator
You can also use the tax saving calculator. It is a tool that calculates the taxes saved by using the 80c tax deductions provisions. Besides all of that, it is very important for you to know that section 80c is a well-known tax saving deduction provision, where you can save up to a maximum 1.5 lakh per financial year, using certain expenses and investments. All you need to do is follow the provision. Tax saving calculator platform comprises of a formula box, in which you will enter the total taxable income, & your current income and expenses under 80c. And, by utilizing the current section 80c, the tax calculator will show you the taxes that you have saved. Its that simple and easy. All you need to do is choose a good tax calculator.
