Tax Saving Tips: You can take advantage of tax exemption on personal loan, know what is the way

Young people can save tax in this way, these are the best investment options


new Delhi. When you start a job, it is normal to spend or get more. Every salaried person has to pay a part of the earnings in the form of tax in the year. For this, you have to strike a right balance between saving and investing. You can save tax by planning properly.

Section 80C is the most common of the deductions available in the Income Tax Act. People use it the most for tax saving. Under this section, you can claim deduction only if you have opted for the old/existing tax regime in the financial year. If you have opted for the new system of low rate income tax, then you will not be able to claim deduction under this section.

Through section 80C, one can save tax up to Rs 1.5 lakh. This amount is deducted from the gross total income. This reduces taxable income. Hence, the tax liability also decreases in the same proportion. By fully utilizing this deduction, a person falling in the highest bracket of 30 per cent can save Rs 46,800 (including 4 per cent cess).

investment options

>> Government and private employees can invest in National Pension Scheme (NPS). This is also a tax saving scheme. In this, according to rule 80C of Income Tax, you can get tax exemption on investment of Rs 1.5 lakh.

>> Under Unit Linked Insurance Plan (ULIP), you get both insurance and investment. In this, you get tax exemption up to the investment of 1.5 lakhs.

>> Apart from this, Public Provident Fund (PPF) is a very famous scheme, in which you get tax exemption on investing. Along with this, an interest rate of 7.1 percent is also available on investment. You can get tax exemption up to an investment of 1.5 lakhs.

>> Investing in Tax Saving Mutual Fund ELSS (Equity Linked Savings Schemes) can prove to be a great option for you. One, under section 80C of Income Tax, tax exemption is available on investment up to Rs 1.50 lakh. On the other hand, it also gives the highest return among all other tax saving schemes.

>> Tax saving mutual fund schemes have a lock in period of 3 years only. While there is a lock-in period of 5 years in Senior Citizen Savings Scheme, 5 years in NSC and 15 years in Public Provident Fund, but after 6 years you can do Partial Withdrawal.

Tags: income tax, Tax saving


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