What all instruments are tax-free in India?
Some of the most popular tax-free investment options in India are:
- Public Provident Fund (PPF)
- Employee’s Provident Fund (EPF)
- Sukanya Samriddhi Account
- Senior Citizens Saving Scheme
- National Pension Scheme (NPS)
Where should one invest to save tax?
Some of the tax saving instruments that are popular among all Indians are:
- 5 years bank fixed deposit
- Life Insurance
- Public Provident Fund (PPF)
- Senior Citizen Saving Scheme (SCSS)
- National Pension Scheme
- Equity Linked Savings Scheme (ELSS)
- National Savings Certificate (NSC)
- Unit Linked Investment Plan (ULIP)
How much money should I save for my taxes?
Investors can claim a tax deduction of up to Rs.1.5 lakh towards the premiums paid under Section 80C of the Income Tax Act, 1961.
How many instruments can one hold for tax-saving?
There is no maximum limit on the number of instruments that one can hold to avail tax exemption under the Income Tax Act. Even though there is no maximum limit on the number of instruments one can hold there is a maximum limit up to which a person can avail deduction under it.
How does one pays taxes on the investments?
The taxes that one needs to pay on the investments held by them depends on the type of instruments held by the person. Following are some of the investment types where taxes are levied:
Capital Gains:Whenever an investor sells an investment and makes a profit on it, they are required to pay the taxes.
Tax on Interest:The interest earned on various tax saving investments is also tax-free, however, there are some tax saving instruments where the investor needs to pay tax on the amount of interest earned.
Dividends and Other Incomes: The investors need to pay the interest on dividend, interest rentals, and any other income apart from that on profits earned from selling an investment.
How can I pay less tax on higher income?
In order to pay less tax on higher income you need to make investment in tax saving or tax-free investment avenues.
What is the maximum limit of investment one can make under Section 80C?
The maximum investment one can make under Section 80C of the Income Tax Act is Rs. 1.5 Lakh.
What all investments come under Section 80C of the Income Tax Act?
The investment instruments that are eligible for deduction under Section 80C of the Income Tax Act are:
- PPF
- NSC
- SCSS
- ELSS Mutual Funds
- Pension Fund
- Life Insurance
- 5 years Post Office Deposit
- 5 years Bank Fixed Deposit
How to reduce taxes legally?
To reduce your taxes legally you should start investing in tax-free investment instruments approved by the government.
