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The tax filing season is an important financial period of the year. While you collate necessary information, understand your tax slab and compute the taxable income, you also strive to save tax. After all, every penny saved is a penny earned. 

Fortunately, Section 80C under the Income Tax laws comprises a set of tax-saving investments. They bring you the opportunity to help you avail tax exemptions and tax-free income. You can effectively claim exemptions of up to a maximum limit of ₹ 1.5 Lakhs on investments such as fixed deposits, income insurance, and provident fund. 

Without further ado, let’s understand the 10 tips that can help you save on tax.

Employee Provident Fund

Employee Provident Fund is also known as EPF. It is a retirement fund that is managed by the Central Board of Trustees. It was introduced under the Miscellaneous Act, 1952. As part of this investment scheme, you and your employer can contribute a maximum of 12% of your salary to this fund. The contributed amount earns you interest and the accumulated sum is tax-free. 

Public Provident Fund

The Public Provident Fund or PPF is an important investment for salaried employees. This scheme lets you open a PPF with an amount as low as ₹ 500 and a maximum of ₹ 1.5 Lakhs. The amount invested towards the fund, the interest earned, and the maturity sum do not incur tax.

Equity Linked Savings Scheme

ELSS is a mutual fund scheme that is driven by investments in equity. Do note that ELSS is subject to a lock-in period of 3 years. It is a good opportunity to generate wealth. ELSS is a good tax-saving option as the investment made towards the plan is deductible under Section 80C.

Life Insurance

Life insurance is yet another great way to save money while also securing your future. There are different types of insurance plans that you can choose from, like term insurance. The premiums paid towards the insurance are tax-deductible under Section 80C of the Act. Additionally, the sum assured carries applicable tax benefits under Section 10(10D) under favourable terms. 

ULIPs

Unit Linked Insurance Plans or ULIPs carry the best of insurance and investment. The premiums provide a financial cover to your family and also help you gain returns.

It lets you save taxes on premiums paid, the returns gained, and the sum assured on maturity. However, it is subject to specific conditions as per the evolving tax guidelines. 

Home Rental Accommodation

If you live in a rented property, you are eligible for tax savings as per rules specified in the Income Tax Act. A part of it is exempted from tax under Section 10(13A), subject to given terms. You can benefit from tax deductions if you are a salaried individual.

Health Insurance

Health insurance has become an essential investment today. Medical expenses have shot up and it can create a dent in your pocket. When you get health insurance, you can save with tax benefits on premiums paid under Section 80D. 

Gratuity

Gratuity is a fund offered to an employee on resignation, superannuation, retirement, dismemberment, or death. It is tax-exempt under Section 10(10). However, you should complete a minimum of 5 years to be eligible for the receipt of the amount.

Tax Saving Fixed Deposit

Fixed deposits continue to be a popular investment option. They also help you save on taxes. The fixed deposit comes with a 5-year lock-in period. It provides you guaranteed returns and this makes it a safe investment option. The tax-saving on FD can be claimed under Section 80C.

National Pension Scheme

The National Pension Scheme or NPS helps you plan your retirement. It is a safe investment option that is a great option for salaried persons. 

You can claim tax benefits under Section 80C of the IT Act. Further, you can enjoy additional deductions of up to ₹ 50,000 u/s 80CCD(1b).