If you are a working professional, then you must know the horrors of paying tax at the end of each financial year. There is a lot of hassle around the process and taxes take away a significant amount of your money as well. That is why many people tend to save taxes in various ways. Several tax saving schemes will help you to save tax if you invest in them correctly. However, you need to have a clear idea about the financial market for choosing the right scheme for you to save taxes. The amount of taxes varies from person to person, depending on their income amount. There are tax slabs and based on your income; you will fall into a particular category. You should choose your tax saving schemes depending on which slab you are in. Here are some ways to help you save your taxes.
- Invest in life insurance
Life insurance is a good way of saving taxes. A life insurance policy offers financial protection to one’s family in case the person opting for that policy dies. This is not only a good investment option for your family but also provides ways to save taxes. A life insurance policy runs on premiums paid at different intervals and on the policy doer’s death, a lump sum amount is paid to the family of that person. The premiums one pays for the life insurance policy come under the privilege e of tax deduction. Thus, getting life insurance helps both your family in your absence and helps you as well by saving your taxes.
- Take home loan
Taking a home loan is also a very good way of saving taxes. If you are paying 1, 00,000 each year for the principle and interest amount, then you will be eligible for a tax deduction. You should also keep in mind that taking a loan for renovating your home also has tax-saving benefits. Thus, whether you apply for a home loan to build a new house or renovating your old house, you will be able to save considerable tax money.
- Invest in ULIPs
United Linked Insurance Plan or ULIP refers to market-related plans. If you invest in the best ULIP plans, then you will be offered both protection and investment benefits under a single investment. Moreover, investments under this scheme also come with tax benefits as well. Investing in ULIP will also help in the growth of your money. Thus, you will not only be able to save your taxes but also will be able to grow your money. This is why many people choose this scheme for having two benefits under one plan.
- Buy health insurance
Another good way of saving taxes is buying health insurance policies. The costs of health care amenities are going high day by day and having a health insurance policy will save you from paying hefty amounts for any medical situation. Moreover, by paying regular premiums for your health insurance policy, you will be able to save some amount of taxes that will range in between rupees 15000 to 20000. Thus, investing in health insurance will offer you multiple benefits.
- Fix deposit your money
You can also FD your money to get tax-saving benefits. If you keep 1 lakh or 2 lakhs as a fixed deposit, then you will get lucrative rates of interest, and your taxes will also be saved for the year. The lock period in which an FD works is five years. Fix depositing your money will thus save your taxes along with providing you interest and thus growing your money.
- Invest in mutual funds
You can also use ELSS or Equity Linked saving schemes to save your taxes. These schemes come with a lock period that spans three years and helps significantly in saving taxes.
Above are mentioned some of how you can save taxes. There are various other ways in the market of saving taxes. Regardless of which ways you choose, make sure to do proper research before jumping on it.