Income tax is one of the major sources of revenue for the government. It helps the government to finance various development projects, social welfare schemes, and infrastructure initiatives that benefit the country as a whole.
The income tax system in India is progressive, meaning that those who earn more pay a higher percentage of their income as tax. This redistribution of wealth aims to reduce income inequality and promote social justice.
Why do you get tax saving options?
Government provides various tax saving deduction options to encourage individuals to save and invest for their future. It is believed that promoting savings and investment is essential for the overall economic development of the country.
Tax deductions help reduce the tax liability of an individual, which ultimately leads to more disposable income in the hands of taxpayers.
Tax saving by using various deductions
The Income Tax Act allows tax deductions for certain types of investments, such as contributions to provident funds, donations and life insurance premiums, etc. These cuts encourage people to save and invest, which can help spur economic growth.
here are some simple tax saving tips which you can follow. However, individuals should note that the information is for informational purposes only and should not be considered professional advice. You should seek professional advice specific to your particular circumstances before making any financial decisions.
- Invest in tax-saving instruments like Public Provident Fund (PPF), National Savings Certificate (NSC), Equity-Linked Savings Scheme (ELSS). Investing in these instruments can help you save tax.
- Claim deduction: You can claim deduction for various expenses like medical expenses, education expenses and others. Make sure to keep all the necessary receipts and bills for claiming the deduction.
- To use section 80c: Under Section 80C of the Income Tax Act, you can claim a deduction of up to Rs. 1.5 lakh on investments made in tax-saving instruments like PPF, NSC, ELSS, and more.
- Make use of Section 80D: Under Section 80D, you can claim deduction on health insurance premium paid for yourself, your spouse and your dependent children.
- To use Section 80TTA: Under Section 80TTA, you can claim maximum deduction of Rs. Can claim deduction up to Rs. 10,000.
- Keep track of your investments: Make sure to keep track of all your investments and claim deductions accordingly.
- File your tax return on time: Filing your tax return on time can help you avoid penalties and also ensure that you do not miss out on any tax saving opportunities.
Taxpayers should note that the deductions available to you are limited to the arrangement (old and new tag rule) you had chosen while filing income tax return.
It is important to consult with a tax professional before making any decisions regarding tax planning to ensure that you are making the most of the options available.