How to save tax for the F.Y.2021-22 as per Budget 2021 with Automated Income Tax Revised Form 16 for the F.Y. 2020-21 as per New and old tax regime U/s 115 BAC
How to save tax for the F.Y.2021-22. Every citizen of a country has a responsibility to pay taxes. In the case of economic, social, infrastructural, political changes, the government collects taxes directly or indirectly for the welfare of the people. At certain times, a person may feel that the tax burden on them is too high and they may not be able to save any of their income due to the extra tax.
In this article, we will discuss some legal ways to solve this problem so that a person can actually save some part of their money and not pay it as tax at all. Everyone wants to save tax in one way or another. Without further ado, let's talk about how to save taxes: -
1. To give alms
The government always encourages individuals and organizations to make grants and charities. Charity is good for the poor and good for society. The government has given various benefits and concessions to those who choose to donate generously and participate in charities.
Grants to the Prime Minister's Relief Fund, NGOs and political parties can in most cases give you a 100% tax exemption under Section 80G of the Income Tax Act. Recent amendments to the law include the Clean India Fund, the National Fund for Drug Abuse Control, and the Clean Ganga Fund for clearance.
2) Investment in education or learning
In today's world, every parent wants their children to get the best education and every child wants to succeed in their education through the best education. With rising inflation, even the cost of tuition and education is rising. The interest to be paid on education is exempt from tax.
The deduction is not available on the original payment. Exemption from education loan exemption under Sec 80E and premium for child insurance plan exempt from tax under Sec 80C.
3. Invest in market-connected instruments
Income from fixed deposits and recurring deposits is taxable and honestly, these are old enough as concepts. No one can invest in FDs or RDs because they do not provide high returns but lock your money for a long time. Tax-saving investment plans such as ELSS (Equity-Linked Savings Schemes), PPF (Public Provident Fund) and NPS (National Pension Scheme) are an intelligent form of tax saving for your investment.
The goal of ELSS is to invest mostly in equity related instruments and to carry a heavy risk where NPS and PPF are in long term consideration in most cases. NPS relates to voluntary and long-term investment plans for retirement where PPF is a savings-tax-tax-saving tool to mobilize small savings by offering an investment with reasonable returns and tax benefits. You are exempt from paying tax on ELSS with premiums of less than Rs 1.5 lakh and a lock-in period of three years.
4. Paying a mortgage and paying interest can be a major form of tax saving for an individual. To get the full benefit of a home loan, the amount of a home loan has to be huge. For an ongoing home loan, a waiver may be sought under section 80C on the repayment of the principal amount. Banks and NBFCOs are offering better deals on home loans and so getting home loans is becoming relatively better and easier.
5. Insurance policy
The Kovid-1p epidemic is making people more interested in buying insurance for themselves and their families. It is important to have insurance in this day and age due to the uncertainty of life. It is important for everyone to have an insurance policy because of the number of benefits.
Life insurance can be in many cases such as Maturity Benefit, Term Plans, Money-Back Policy and ULIP (United Linked Insurance Plan) plans. The premiums paid for life insurance policies are not taxable unless they are more than Rs 2,000. 1.5 lakh
The premium paid qualifies for the tax benefit under section 80s, but the maturity value and death benefit remain tax-free. ULIPs offered by insurance companies are a single plan that offers investors both insurance and investment under a single consolidated plan.
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