s Taxes are unavoidable but that’s not to say they can’t be minimized or even avoided altogether. Here are a few strategies that enable you to save tax with ICICIdirect through Tax-Saving Mutual Funds, National Pension Schemes, Life Insurance, and Health Insurance .
Table of Contents
What is Tax?
A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity) by a governmental organization in order to fund government spending and various public expenditures. The tax may also be refer to as a head tax, poll tax, property tax, excise duty, sales tax, excise tax, or luxury tax.
How do tax-savings?
The government has been giving various tax-saving incentives and rebates to the citizens. But there are certain things you can do to save tax. Here are some of those things:
Mutual funds are a good way to save tax as they offer good returns on your investments. You can also make use of Tax-Saving Mutual Funds which can provide you with a good return of up to 15% per annum. These funds have been designe by experts and they provide excellent returns on your investment. You ICICIdirect invest in these funds by using the ICICIdirect platform .
National Pension Scheme
National Pension Scheme (NPS) is another option for you to save tax on your investments. You can contribute up to 10% of your salary every month towards this scheme, which will be invest in pension schemes offered by LIC, HDFC Bank Life Insurance Company Limited, and Airtel Payments Bank Limited (APBL). The NPS allows you to get an interest rate of 8% per annum on your contributions with effect from April 1, 2020, onwards. This means that if you put in Rs
Tax-Saving Investments Under Section 80C
Section 80C of the Income Tax Act, 1961 states that a person can save up to Rs 1.5 lakh annually in different tax-saving investments. These include:
Mutual Funds
National Pension Scheme
Life Insurance
Health Insurance
Public Provident Fund (PPF)
The main objective of PPF is to provide retirements benefits for people who are working for the government and other organizations. It also provides life cover up to Rs 1.5 lakh. You can also opt for an additional life cover of Rs 1 lakh or any other amount that you want.
The interest earned on your PPF account can be redeemed at any time after maturity when it will be paid out as a lump-sum payment or in monthly installments according to your choice.
How to Plan the Tax-saving Investments?
Planning your investment and planning the tax-saving investment can be done in advance. This will help you to calculate the returns on investment and know how much tax you need to pay, and when it is required to pay it.
The first step is to decide what kind of investments you want to make. You should know about the risks involved in each investment and how much return you can get from them.
After that, you need to calculate your retirement funds, which will include both fixed deposits and mutual funds. This can be done by taking stock of all your financial records and making some calculations on those.
Conclusion
The taxes are a way of putting into use the limited resources of the society in such a way that all get to share in the benefits. In other words, it is a social norm follow by all the members of society. These taxes decide the pattern of use of natural and human resources so that the total income is distribute evenly among the members. More