People are afraid of tax and they do not like to pay it for one reason or other. Also, they do not like it because with the increase in their income the amount of tax they have to pay also increases. But if you are wise enough you will know that there are a plethora of tax saving tools available. Of course, knowing every rule regarding taxes is impossible but tax planning has become essential especially when the tax cut is quite huge. Tax planning means using the tax saving tools the most and keep most of the earing to yourself. Tax rules vary according to the earning, situation and assets. If people put a little effort and intelligence then they can save a part of the whole tax from being cut. People can also take advice from the experts for this. People are now much more aware than previous regarding the importance of tax planning. They are taking this very seriously as they are interested to save the taxes. Here are some important tools for tax planning:-
- Equity Linked Saving Scheme:- The ELSS investment will be locked for much lesser period than the lock-in periods of many other prevalent tax saving investment types such as National Savings Certificate, Public Provident Fund etc. an ELSS is locked in for 3 years, of PPF investment, is 15 years and of NSC investment is 6 years. The lock-in period of the fixed deposits in the banks, eligible for tax deduction is 5 years. ELSS provides a better return as well as income from the invested amount during the lock-in period.
- Insurance policies:-Insurances of various kinds like Life Insurance, health insurance, and education insurances are very popular adapted tax saving tools. There are numerous plans available for each kind of insurances. In the business of insurances, both government and private companies are involved. There are certain sections in the constitution, which legalise the deduction in tax for the insurance holders.
- Public provident fund:-PPF or the Public provident fund is another income tax saving scheme, widely accepted by the common people. This investment scheme provides both assured returns and tax benefits. PPFA and PPFS govern this investment scheme. The period of maturity is 15 years, which can also be extended up to 5 years.
- Residential housing property: –The tax benefits for this scheme are of different kinds and each of them is This scheme is available for any individual or HUF. The deduction of tax will be available when the principal amount is repaid. Also, if you have taken any house loan, then you may get a deduction for interest in most of the cases.
Apart from the above-mentioned tools, there are mutual funds in India and Sukanya Samirddhi Plan, which also can be termed as effective and popular taxation planning tools. Remember, every penny that you earn is hard earned and you should try your level best to save every bit of it as much as possible.