Last minute Income Tax saving tips to save on your taxes in 2023
As the saying goes, “In this world, nothing is certain except death and taxes.” Taxes are an unavoidable reality for most people, but did you know that there are ways to significantly reduce your taxable income? In this blog, we will discuss various strategies to help you reduce your taxable income in India before the end of the year and beyond.
How can I drastically reduce my taxable income? | How can I reduce my taxable income in India before the end of the year?
One of the best ways to reduce your taxable income is by investing in tax-saving instruments. These instruments not only help you save tax but also offer various other benefits such as higher returns and long-term savings. Here are some popular tax-saving instruments that can help you lower your taxable income:
Public Provident Fund (PPF) – PPF is a long-term investment option that offers tax benefits under section 80C of the Income Tax Act. The interest earned on PPF is tax-free, and the contribution made towards PPF is also eligible for tax deduction.
National Pension Scheme (NPS) – NPS is a retirement-oriented investment plan that offers tax benefits under section 80C and 80CCD of the Income Tax Act. The contributions made towards NPS are eligible for tax deduction, and the maturity proceeds are also tax-free up to a certain limit.
Premium Paid for Life Insurance policy – Premiums paid towards life insurance policies are eligible for tax deduction under section 80C of the Income Tax Act. The maturity proceeds from these policies are also tax-free.
National Savings Certificate (NSC) – NSC is a government-backed investment scheme that offers tax benefits under section 80C of the Income Tax Act. The interest earned on NSC is taxable, but the investment made towards NSC is eligible for tax deduction.
Equity Linked Savings Scheme (ELSS) – ELSS is a mutual fund investment option that offers tax benefits under section 80C of the Income Tax Act. The investment made towards ELSS is eligible for tax deduction, and the returns earned on ELSS are also tax-free.
Home loan’s principal amount – The principal amount of the home loan is eligible for tax deduction under section 80C of the Income Tax Act. The maximum deduction allowed is up to Rs. 1.5 lakhs.
Fixed deposit for five years – Fixed deposits for five years in any scheduled bank are eligible for tax deduction under section 80C of the Income Tax Act. The maximum deduction allowed is up to Rs. 1.5 lakhs.
Sukanya Samariddhi account – Sukanya Samariddhi account is a government-backed investment scheme that offers tax benefits under section 80C of the Income Tax Act. The investment made towards this scheme is eligible for tax deduction, and the maturity proceeds are also tax-free.
Children’s tuition fees – The tuition fees paid for your children’s education are eligible for tax deduction under section 80C of the Income Tax Act. The maximum deduction allowed is up to Rs. 1.5 lakhs.
How do I avoid taxes on a large sum of money?
If you have a large sum of money that you want to invest or save, there are ways to avoid taxes. Here are some strategies that can help you avoid taxes on a large sum of money:
Invest in tax-free bonds – Tax-free bonds are bonds issued by government companies that offer tax-free interest income. These bonds can help you avoid taxes on a large sum of money.
Invest in a tax-free mutual fund – Tax-free mutual funds invest in tax-free bonds and offer tax-free returns. Investing in a tax-free mutual fund can help you avoid taxes on a large sum of money.
Invest in real estate – Investing in real estate can help you avoid taxes on a large sum of money. You can invest in a property and claim deductions on the interest paid on your home loan and the depreciation of the property.
Invest in a retirement plan – Investing in a retirement plan such as NPS or a pension plan can help you avoid taxes on a large sum of money. These plans offer tax benefits on the contributions made towards them, and the maturity proceeds are also tax-free.
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