Tax saving is one of the most significant factors you need to consider while preparing your investment plan. Regardless of how much you earn, you must always prepare an investment plan as it not only allows you to save funds for the future but further allows you to build a significant corpus over time.
To get the most out of your investment planning, it is always better to start investing your funds from an early age, as when you are young, your financial obligations are lesser than older age. However, regardless of your age or economic status, how much tax I can save with investments in 2021 must always be the end goal.
Another goal you must consider early in life is purchasing a term insurance plan to secure your family’s continued financial protection even when you are no longer around.
To avail the highest amount of tax savings on all your investments, it is essential to get your investment plan early in the fiscal year and then adhere to it. The Union Budget announced by the Finance Minister of India at the start of every year is when investors can find out which investment instruments provide for the highest amount of tax savings and some of the tax-free investments in India 2021.
There are numerous sections under the Indian Income Tax Act, 1961, which provide tax savings through a range of varied tax saving instruments. Mentioned below are some of the major sections under the IT Act that provide tax benefits and exemptions on all your investment plans.
Section 80C of the Indian Income Tax Act, 1961 has grown as the most popular and prominent section over the years under which investors can claim tax savings on their investments. In the recent Union Budget for 2020-21, the benefits received under Section 80C were retained with the maximum tax exemption continuing at Rs. 1.5 lakh yearly.
To avail of tax exemptions under Section 80C of the Income Tax Act, you can invest in a range of tax-saving instruments.
Some of the prominent investment plans that allow tax-saving benefits under Section 80C includes Public Provident Fund (PPF), Employee Provident Fund (EPF), premiums paid on life and term insurance policies, 5-year post office or bank savings account, National Savings Certificate (NSC), Equity Linked Savings Schemes (ELSS), National Pension System (NPS) and even the deposits made in the Sukanya Samriddhi Account.
Tax savings benefits under Section 80CCD of the Indian Income Tax Act, 1961 can be availed by investing funds in all the pension schemes run by the Government of India, such as the National Pension Scheme (NPS), or by investing funds under pension plans from reliable financial institutions.
Under this section 80CCD, the maximum tax exemption allowed is up to Rs. 50,000. This is one of the most lucrative tax-saving options for salaried individuals in 2021-22, as it allows them to save significant funds for a financially stable retirement.
This section 80D of the Indian Income Tax Act allows for tax exemptions on all the payments made on settling the premiums of your health insurance policy. As more and more people invest their funds in health insurance in the present times due to the wake of increasing expenses of healthcare treatment, the Government of India has enabled individuals to avail themselves of tax advantages to make it easier to invest in healthcare investment plans.
You can easily save up to Rs. 25,000 on all the investments made of health insurance policies for yourself, along with the policies purchased for your spouse, parents, and children.
Tax-saving benefits and exemptions under section 80G of the Indian Income Tax Act, 1961 can easily be availed on all the charitable donations made towards philanthropic funds, organizations, and any other kind of government aid.
By donating funds to charitable events or organizations qualified in this act, you will receive tax exemptions of 50 percent on the total amount of the donation made. However, you must note that the total amount donated cannot be more than 10 percent of your adjusted gross total income.
Under Section 80E of the Indian Income Tax Act, 1961, you can claim exemptions and deductions on the repayment of interest on any educational loans you may have taken. The exemption granted under this section is applicable on any loans taken towards education for the self, spouse, or even your children.
This section of the Income Tax Act pertains to the interest amount you earn on your savings bank account. This interest earned is usually recorded under the head “Income from Other Sources''. However, the maximum exemption limit for tax savings under Section 80TTL is capped at Rs. 10,000.
Section 80TTB is applicable only for senior citizens. Tax deductions and exemptions under this section can only be availed on the interest earned by senior citizens from their fixed deposits, savings accounts, post office savings, term deposit, and recurring deposits, etc.
Under section 80TTB of the Indian Income Tax Act 1961, the maximum amount allowed for tax savings is capped to Rs. 50,000.
The most dependable way to save taxes is to invest funds in investment plans that provide the above-mentioned tax advantages. Term insurance is one such most beneficial tax-saving instrument.
In that case, you can opt for the iSelect Smart360 Term Plan by Canara HSBC Oriental Bank of Commerce Life Insurance. It provides adequate coverage and further allows you to secure the financial future of your loved ones at the most affordable and flexible premium payouts.