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Financial Year End 2018-19: Simple and efficient ways to save income tax
Here are some efficient ways to save income tax valid under the Income Tax Act 1961 right before the financial year 2018-19 comes to an end.
As the financial year 2018-19 is close to an end, the tax saving season is on for both salaried and non-salaried individuals. Choosing the right investment options is necessary so that it not only helps you save tax but also generate tax-free income.
Safety, liquidity and returns are some of the factors to consider while choosing the right tax saver. If your salary is taxable, it is difficult to earn money in the long run as taxes can burn the returns. For example, if you opt for the five-year plan of National Savings Certificate (NSC) or Senior Citizens' Savings Scheme (SCSS), the interest you earn gets added to the deposits and is collectively taxable in the next financial year.
The easiest way to save tax is to make an investment of Rs 1.5 lakh. The principal investment qualifies for deduction under Section 80C of the Income Tax Act, 1961 and the income in all of them is tax exempt under Section 10. You can also purchase medical insurance and claim a deduction of up to Rs 25,000 or Rs 50,000 if you’re a senior citizen. A home loan interest under Section 80EE allows you to claim a deduction of up to Rs 50,000.
Here are a few other options to consider while saving tax:
1. Equity-Linked Savings Schemes (ELSS)
2. Public Provident Fund (PPF)
3. Employees’ Provident Fund (EPF)
4. Unit Linked Insurance Plans (ULIP)
5. Traditional Insurance Plans
6. Sukanya Samriddhi Yojana (SSY)
Did you know you can also save money through charitable donations? For donations to NGOs, the upper limit is 50 per cent of your taxable income. Moreover, the interest on savings accounts is tax-free up to Rs 10,000 per year under Section 80TTA. So, calculate your income and save money by investing it smartly.
