Taxes are often likened to as a necessary evil. Although they eat into your hard earned savings, they cannot be avoided. Hence, tax savings is one of the cornerstones of financial planning. Whether you are salaried or a professional, investing smartly in tax saving schemes can save a significant portion of your income from taxation. Acting Finance Minister Piyush Goyal recently announced a slew of changes in personal income tax rules, which is set to benefit at least 3 crore Indians. A full tax rebate has been announced for people who are earning a net taxable income up to Rs 5 lakh. Additionally, those earning Rs 6.50 lakh can also get a full rebate considering that standard deduction has been increased by Rs 10,000 to Rs 50,000. Even if you do not fall under the full tax rebate slabs, The Income Tax Act provides major exemptions to tax payers under various section such as 80C, 80CCD, 80CCE, 80D, 80E and so on.
Here are some of the top tax saving avenues you can consider for 2019: –
Life Insurance Plans – Section 80C (Premium) & Section 10D (Maturity/Death Benefits)
Besides securing your family’s future, a Life Insurance Policy is also one of the best tax saving instruments available in the market. You can avail tax benefits of Rs 1,50,000 for the premium paid towards a Life Insurance Policy under the Section 80C of the Income Tax Act, 1961.
Health Insurance Plans – Section 80D
As a Health Insurance policyholder, you can enjoy tax deductions on the premiums paid up to Rs. 25,000 for self and family (spouse and children) under the Section 80D of the Income Tax Act, 1961. If you are a senior citizen, then the maximum deduction for self and family increases to 50,000. If you are paying for a health insurance plan for your parents as well then, you will be eligible for tax deduction of up to Rs. 25,000. The same increases to Rs. 50,000 for senior citizen parents.
ULIP Plans – Section 80 CCC (Premium) & Section 10(10D) (Maturity Benefits)
ULIPs are one of the most tax saving investment plans available in the market today. Besides offering the dual benefits of a Life Insurance and growth through market linked investments, the premium paid toward ULIPs is eligible for tax deductions under the Section 80C up to a maximum of Rs 1.5 lakhs for a given financial year. Moreover, the amount you receive on maturity is exempt from tax under Section 10(10D). ULIPs fall under the EEE (exempt-exempt-exempt) tax structure i.e. Exempted at Investment Stage, Exempted at Accrual and Exempted at Withdrawal, which makes it an attractive tax saving avenue.
PPF – Section 80C
PPF or Public Provident Fund is a great long term saving scheme with amazing tax benefits. The PPF offers tax benefits under the section 80C of the Income Tax Act, 1961. The payments made towards PPF is exempt from tax up to Rs. 1,50,000.
So go ahead and take advantage of the options in front of you. Optimize your financial planning through tax saving schemes that are relevant for you.
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