How to Save Taxes Legally? Expert Suggests these 8 Smart Ways

Every person wants to save money on taxes. However, many don’t know how to lower their tax liability. There are various investment options that can help taxpayers reduce their taxes.

Read on to know more about 8 options that can help you save tax.

Saving tax is a crucial part of every taxpayer’s financial portfolio. But, many individuals don’t know the ways to reduce their taxable amount. There are various options that provide individuals tax benefits. These options will help them in saving tax.

Let’s take a look at some options that can help save tax:

ELSS is one of the best tax-saving investment option. These funds provide higher returns compared to other tax-saving options.

While ELSS funds are great for earning returns and saving tax, investors should keep in mind that they are a high-risk options, as the money is invested in the stock market. However, it will suit investors who want to stay invested for the longer term. Individuals need to report their investments in ELSS while e-filing Income Tax returns, to claim Tax deductions.

If you are looking to invest in this instrument, you should consider ICICI Bank’s ELSS. It invests in various large and medium-sized stocks. You can avail Tax deduction under Section 80C, by investing in ELSS.

NPS will suit taxpayers who are looking for a long-term tax saving option. Furthermore, NPS is a great investment option, for people with a low-risk appetite.

By investing in an NPS, taxpayers become eligible for a tax deduction of up to Rs 1.5 lakh under Section 80C. Also, under Section 80CCD (1B), taxpayers can claim an additional deduction of up to Rs 50,000.

Another popular option that helps in lowering tax liability, are Tax-saving FDs. Individuals can claim a deduction of up to Rs 1.5 lakh under Section 80C by investing tax-saving FD.

A ULIP is a unique product that offers the benefits of Investments and Insurance. When a person invests in a ULIP, a part of the premium is invested towards Life Cover, and the remaining amount is invested in various investment instruments like Equity and Debt Funds.

Apart from Insurance and Investment benefits, ULIPs also help reduce the tax amount. Premiums paid to purchase this plan can be claimed as a tax deduction up to Rs 1.5 lakh under Section 80C.

Medical expenses can cause a huge financial burden on people who don’t have a Health Insurance. As Health Insurance covers various medical expenses, it can provide financial protection to the policyholders.

Policyholders can claim a tax deduction of up to Rs 25,000 under Section 80D, on the premiums paid, to purchase the plan for self and family. People can claim an additional Tax deduction if they purchase Health Insurance for their parents. If parents are below 60 years of age, then the deduction limit is Rs 25,000. If parents are above 60 years of age, the limit is Rs 50,000.

This investment option is for citizens above 60 years of age. SCSS is great for individuals looking for long-term options. Under Section 80C, individuals can claim a Tax deduction of up to Rs 1.5 lakh, by investing in this scheme.

Life Insurance is one of the most common investment options to avail a Tax deduction. Premium paid to purchase a Life Insurance Plan, can be claimed as a Tax deduction of up to Rs 1.5 lakh under Section 80C.

Leave travel allowance is an exemption that employees receive from their employer. Employees can avail this exemption if they travel on leave.

Keep the aforementioned points in mind if you are looking for options to save tax.

Disclaimer-"The user needs to verify all the facts", law and contents with the text of the prevailing statutes and seek appropriate professional advice before acting on the basis of any information contained herein, as the taxation implications may vary depending upon the facts in each case/interpretation by tax authorities, and the tax laws are subject to change from time to time. ICICI Bank Ltd expressly disclaims any liability to any person, in respect of anything done or omitted to be done by any such person, by placing reliance upon the contents of this write-up.

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