Financial independence is a celebrated goal for every woman in India. One of the ways you may end up losing money is through taxes. However, there are some tax saving options that can not only help you save money but also prove to be great investments in your future.
A smart way to save tax as well as take care of one’s medical requirements is to invest in health insurance. Health insurance is considered as one of the safest investment options and can provide much-needed support when someone in your family is sick.
Hospitalization, medications, ambulance charges, surgeries, private care, and other such things that you may make use of, can amount to a big hospital bill that can leave your savings tattered.
Let us look at a detailed description of things you can turn to when looking for a tax-saving option.
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Top tax saving options available for Indian women in 2022
- Invest in Public Provident Fund – Public Provident Fund is a stable, safe, and dynamic option for Indian women. It is perfect as it offers a higher rate of interest (up to 8%) compared to Fixed Deposits and Recurring deposits. The deposit amount can be manual and you can deposit starting from 500 rupees to a higher amount. The period for PPF is 15 years, however, you can withdraw 50% of the amount after 5 years. This is the perfect plan for women who have goals to buy a house, need a retirement backup, or have any other big expenses lined up. The amount contributed to the PPF amount is eligible for tax deduction up to 1.5 lakh rupees under section 80C. It is convenient to open a PPF account as it can be started at any bank or post office.
- Consider National Savings Certificate – National Savings Certificate is a great opportunity to lock away funds for your future. It is a fixed income investment scheme that can be started with any post office branch. This scheme was started by the government to ensure that middle level income-earners have a scheme that they can use to save tax and invest in too. Unlike a PPF account, you cannot withdraw any funds before the completion of the maturity period. The rate of interest offered is up to 7% and there is no limit on the amount that can be invested. Under section 80C, you can claim around 1.5 lakhs of tax deduction.
- Look at health insurance – When you are responsible for the wellbeing of your family, it becomes imperative to invest in a good health insurance policy. Health insurance tax benefit can be availed on the amount contributed towards the premium of the health insurance as per section 80D of the Income Tax Act. You can claim up to 1 lakh of tax deduction that is paid towards health insurance premiums. Given the recent waves of the ongoing pandemic, it is clear that without health insurance it may be impossible to recover from the healthcare bills. In case of accidents, critical illnesses, and other such grave health issues can be managed by using health insurance.
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- Buy life Insurance – If you are looking for an option that will help you save tax as well provide for your family in case of sudden demise of the insured, then life insurance is the perfect option for you.
Under section 80C, the amount paid towards the premium of a life insurance policy can be a part of the total 1.5 lakh rupees of tax-saving. Life insurance is typically given to the nominee in case of the demise of the insured by the insurer. At the end of the tenure, a certain percentage of the amount paid towards life insurance is returned.
- Consider buying a house – According to section 80C of the Income Tax Act, repayment towards the principal amount of the home loan is deductible up to 1.5 lakh rupees. Under section 24B, the repayment on the interest of your home loan is also eligible for tax exemptions. The highest limit for tax exemption on interest is 2 lakh rupees. Investment in real estate can only prove profitable in the future whether you decide to rent the house, live in it, or sell it off later on.
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- Donate to charity – A very important provision by the government of India is the tax exemption of charity under section 80G. Any amount donated towards charity is eligible for tax exemption, depending upon the guidelines mentioned in the Income Tax Act. There are many avenues available to make a difference in the life of young children who can receive better education and resources, thanks to the contribution you might make.
- Consider mutual Funds – Investments in Equity Linked Savings Scheme are eligible for deduction from your taxable income under section 80C. This is one of the very few equity-oriented schemes that offer tax deductions. These are great for accumulating wealth for any upcoming expenses you may have as the lock-in period is of only 3 years.
These are a few of the tax saving tips that can be looked at when you are planning your financial path for the year 2022.
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