People in the nation are constantly looking for new ways to reduce their income taxes. Illegal income tax savings are frequently brought to light as well. However, the national government has provided numerous ways to reduce taxes. All of these techniques are legal and available to every taxpayer.
The Income Tax Act of 1962 contains numerous such measures that allow taxpayers to reduce their tax burden. The nation’s government sponsors numerous programmes that allow you to invest and receive income tax exemptions.
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Senior Citizens Savings Scheme
If you have already retired or have applied for voluntary retirement, you may want to consider investing in the Senior Citizens Savings Scheme as a risk-free way to reduce your taxes. It is a strategy for long-term savings that the Indian government supports. Investors may request a five-year maturity extension for an extra three years. You can choose to make a premature withdrawal only one year after the account is opened, and the current interest rate is 8.6%. 1.5% of the deposit is taken away as a penalty if your account is closed before two years have passed. If the interest surpasses 10,000 per year, TDS is applicable and the interest is taxed. You may guarantee a consistent income in your post-retirement with an SCSS account.
National Pension System
The Pension Regulatory Fund Authority of India oversees and administers the National Pension System, a retirement benefit programme. Under section 80C of the Income Tax Act, investments made in the National Pension Scheme (NPS) are also tax-exempt. You may invest up to 1.5 lakh per year in this, plus an additional 50,000 rupees under section 80CCD (1B). You can benefit from a total income tax exemption of Rs. 2 lakh by investing in NPS.
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Public Provident Fund (PPF)
Interest is currently being paid to the Public Provident Fund (PPF) at a rate of 7.1 per cent. You can put money into this plan. If you invest Rs 1.5 lakh in PPF each year, you can receive a tax exemption under Section 80C of the Income Tax Act. Government guarantees mean that money invested in PPFs won’t lose value.
Sukanya Samriddhi Yojana (SSY)
Sukanya Samriddhi Yojana (SSY) investments can help you avoid paying taxes. The central government’s plan is for daughters. On the money invested in this scheme, interest is now being paid at a rate of 7.6%. Tax relief under 80C was formerly only applicable in this plan on the accounts of the two daughters. However, the government altered it. The new rule states that tax exemption will be granted on both accounts if two twin daughters are born after one daughter.
