As we were aware with this old fact that “A saved penny is a penny won’. Everyone individual who earns will pay tax based on their income and expenses and try to save tax too. But before moving on to the topic let’s first know about what is tax and to whom we pay this tax?

Tax is the money to be paid to the government by citizens. The government pays for different items using tax revenue. Taxation is used for people who work for the Government Services, for example for military and police forces, education, health sectors and to repair or construct highways, bridges, and sewers for the country. So, Taxation is used for all the people working for the government. There are two types of taxes for everyone first is ‘direct tax’ and another is ‘indirect tax’. The taxes that are levied for our expenses are ‘indirect taxes,’ and the taxes that apply to our revenues are the ‘direct taxes.’

Here are various ways to save tax

1.The section 80C investment

This is one of India’s best-known tax-saving solutions. Following section 80C of the Income Tax Act, helps you to save hard-earned money on income tax. This section allows you to demand deductions of the investments you made in one financial year, up to the cap of Rs. 1.5 lakh.

Eligible investments under section 80 C for tax deductions:

• Save tax on FDs: Tax savings FDs have to be locked in for 5 years. They currently have a fixed interest rate of between 6 and 8%. Taxable is the profit received on these FDs.
• PPF: PPF’s closing is 15 years. If you want to save tax the interest varies between 7 and 8 percent. The interest on PPF accounts, however, is duty-free.
• Life Insurance Policy: premiums payable for various forms of policy including life insurance, term insurance, etc.
• National Certificate of Saving (NSC): The period is five years and the rate is set. The average now stands at 7%. NSC’s interest can also be calculated under 80C when no additional investments use the cap.

2.Invest in the national pension system (NPS) 

The Government of India has established the National Pension System (NPS) to protect the aged in India. It offers an enticing, long-term method to save tax for a stable, controlled market-based retirement effectively. In this, the deduction for contributions to your NPS account is subject to section 80CCD up to the amount of 1.5 lakh Rs. The lock-in period is however until your retirement for the NPS account.

3.Hurry! Buy a health insurance

As we all know how the pandemic of coronavirus affecting the world so badly, it is very necessary to have health insurance at this time. Not only does the benefits policy minimize the healthcare costs when you get sick or have a serious illness, but it will also shield you from the financial burden that your health issues and unwelcome visitors have.

4.Save tax with a saving account

When you open a savings account in a bank you earn some interest on the money you deposit in the account. The interest you get is tax-free up to Rs 10,000 underneath the Income Tax Act Section 80TTA.

This cap is limited to the elderly and is 50,000 daily. Even, in your savings account, you can hold money and save on taxes. Before you leave your money in your savings account, make sure you have made the estimate.

5.Under section 80EE

According to section 80EE of the Income Tax Act, Section 80EE permits you for the first-time homebuyer to use a tax exemption for interest charged on your home loan. With this, you can assert a tax deduction of up to Rs 50,000 within section 80EE if you are buying a house the first time. This deletion goes beyond the allowances set out in Section 80C and Section 24 of the Income Tax Act helps you to save tax.

Also Read : How to become a Pilot in India- Step by Step

How to save tax for businesses in India

These are the tips to save tax if you are a business owner or thinking of starting a new business.

• Try to pay for municipal taxes through a check

As a deduction from the income on house land, municipal taxes paid during the year can be reported. Municipal taxes are mostly paid in cash by individuals and copies of receipts do not exist. But this will help you to save tax because paying municipal taxes would cause you to claim the deduction and you can also claim the receipt even though you have lost the receipt.

• Assessment of stock

The inventory is usually estimated at cost, but the stock of short shelf-lives should be evaluated based on the lower cost or NRV concept.

The net achievable value is the true attainable asset value, avoiding over-evaluation of the stock, which helps you to save tax at the end of the day.

• Submit your tax return on time

The Department of Revenue Tax recommends that you should produce a timely return for several advantages. A major advantage is that losses on company revenue are carried forward. Losses in business profits can be deferred for the time of subsequent eight years, and can thus be set off from income from the following years unless the same is deducted from income in the current year. Even so, losses are eligible only if the income tax return is filed on or before the due date. So, that how timely filing of income tax return will save tax for your business.

• Avoid making payments in cash 

Do not make cash payments to one person above Rs 20,000/- per day. The income tax act shall not allow deduction of costs if the day payable is not by check or draught to an individual above Rs 20,000/-. According to rule 6DD of the income tax department, some exceptions exist and cases are not available in that clause.

Conclusion

As we said earlier ‘A saved penny is a penny won’. So, if you read everything mentioned above in the article you will already know about many methods to save taxes or how to avoid unnecessary taxes. Either you are a salaried person or a businessman you make yourself financially better and stabl

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