Income Tax Exemption: The Ultimate Strategy Guide

14/11/23

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How to Save Income Tax 

Finding ways to save on income tax is a priority for all. Understanding these simple exemption for income tax strategies in India can go a long way in helping you retain more of your hard-earned money. Taking advantage of these tax-saving opportunities can make a significant difference in your financial well-being. So, make informed financial choices, save on taxes, and secure your financial future. Here are some easy-to-understand strategies to help you do just that.

1. Life Insurance Policies

One recognised method for achieving exemption for income tax is investing in life insurance policies. These policies not only provide financial security but also help reduce your tax liability under section 80C of the Income Tax Act. When you pay your life insurance premium, you can claim a deduction up to a certain limit, ultimately lowering your taxable income.

2. Mutual Funds (ELSS)

Another way to secure exemption for income tax is by investing in Mutual Funds, particularly Equity Linked Saving Schemes (ELSS). ELSS funds offer you the potential for growth while also providing tax benefits. Under section 80C, the amount you invest in ELSS can be claimed as a deduction from your taxable income. This not only helps you save taxes but also allows you to grow your wealth over time.

3. National Saving Certificates (NSC)

National Saving Certificates are an excellent option for individuals looking to save on taxes with a minimum investment of just Rs. 100. These certificates can be obtained from the post office and provide tax exemptions to the investor. The interest earned on NSC is also eligible for a tax deduction, making it a convenient and tax-efficient way to save for the future.

4. Public Provident Fund (PPF)

For those seeking long-term investments and tax savings, the Public Provident Fund (PPF) is a sound financial instrument. PPF not only offers an attractive interest rate but also qualifies for exemption for income tax. Contributions to your PPF account are eligible for deductions under section 80C, helping you create a financial cushion while reducing your taxable income.

5. Eligible Loans

Certain loans can also help you save on taxes in India. Educational loans and home loans are examples of such loans that qualify for exemption for income tax. The interest paid on these loans can be claimed as deductions under various sections of the Income Tax Act, reducing your overall tax liability.

6. Benefit from an exemption for income tax via long-term capital gains.

If you have invested in assets like real estate or stocks for a long time and then have sold them, the government gives you a tax break by not taxing all of your profits. This is known as “long-term capital gains tax exemption.” It is a way of encouraging people to invest for the long term and, in the process, reduce their tax burden. So, holding onto your investments for an extended period can help you keep more of your earnings when you sell them and ultimately save on taxes.

7. Donate to NGOs

Another way to save tax is by exploring opportunities under an 80g certificate. Donating to charitable causes not only feels morally satisfying but can also lead to tax rebates and exemptions, as donors receive an 80G certificate under the Income Tax Act. A trustworthy NGO like Bal Raksha Bharat extends these tax benefits to its donors. When you donate to Bal Raksha Bharat, you are actively contributing to the well-being of India’s most vulnerable children, particularly those in the remotest regions. You not only make a positive impact on their lives but also enjoy the added advantage of tax savings. Plus, it is easy to make donations online, making the process convenient and hassle-free.

Supporting Bal Raksha Bharat is more than just a charitable gesture; it is an investment in India’s future – its children. The organisation has positively impacted the lives of over 14 million children since its inception in 2008. It remains steadfast in its commitment to providing a brighter, fairer, and happier future for India’s most disadvantaged children. When you choose to donate to Bal Raksha Bharat, you experience a dual benefit – the profound satisfaction of transforming a child’s life and the financial reward of reducing your tax liability.

Your valuable contribution goes towards funding projects aimed at enhancing the lives of India’s underprivileged children, ensuring that they have access to better opportunities and a brighter future.

All the crucial work Bal Raksha Bharat does for children relies on the generosity of its donors. Your support can be a ray of hope for children who are in search of a better life. So, why wait? Make a contribution and achieve benefits via 80g certificate today.

Soumi Halder

Manager-Program Campaign and Communication, Programme Support

“With over 20 years of dedicated experience in the social development sector, I am passionate about championing child rights and community empowerment through innovative communication strategies. I am Manager for Programme Campaigns and Communication with Bal Raksha Bharat (Save the Children)."