Wealthy people don’t necessarily earn more, but they definitely save more than what most people do. Even Warren Buffet has often advised people to save first, spend later. And it’s a great principle, but a lot of people wind up in a rush to save and end up making wrong or risky investment choices that end up costing them in the future. So, we’re giving you a few tips to stay safe.
There are numerous provisions in India’s finance laws that offer tax benefits. So here are five simple ways to reduce your tax liability, and get your money working for you.
1. Home loan under Section 80C:
A home loan comes with a two-fold benefit. Not only does it help reduce your tax liability, but also brings the joy of living in your own house. There are several government schemes that make housing affordable in India, which are deductible under Section 80C and 24(b), thereby reducing your taxable income and adding to tax benefits.
2. Health Insurance Plan:
Medical costs in India are always on the rise. Plus, the pandemic has raised a storm of problems and uncertainty. In an environment like this, a good health insurance plan is often deemed a savior. It eases the financial strain of illness on you, and lets you worry about what matters – recovering. These policies also come with tax benefits, which you can avail as per Section 80D, to ensure guaranteed savings.
3. Government-mandated schemes:
There are several Government schemes that people choose to get lucrative returns on investments and tax benefits. You can claim as much as Rs. 1.5 Lakh spent on these investments as benefits on your total annual income, as per Section 80C of the Income Tax Act. Public Provident Fund, Senior Citizen Savings Scheme and National Pension Scheme are some examples of these investment options.
4. Life Insurance Plans:
Protecting your family’s future can help you save money today. With life insurance policies, you can enjoy tax benefits on premium payments, as well as the amount received on maturity. According to the Income Tax Act, there are provisions for premium payments under Section 80C, and for the amount received on maturity or premature death of the insured (whichever is earlier) under Section 10(10D).
Today, having a car at your disposal is no longer a luxury, but a necessity. But does that mean you have to buy a car? No, you can lease one. Car leasing has become a smart and affordable solution for your mobility needs. A corporate car lease lets you drive your favourite car in a cost-efficient manner, greatly impacting your tax savings. In a simple process, you can check if you are eligible for a car lease with your company, sign the contract with the leasing company, and the monthly lease rental amount would be reduced from your pre-tax salary. This means, you’d have a lower taxable income, and in turn, pay less. What’s better, maintenance, insurance, 24×7 roadside assistance, and other services can be bundled together in your monthly lease payment. In short, you take the car, the leasing company takes care of the hassles.
To give you an example, ALD Automotive is a corporate car leasing company, which carries out end-to-end car leasing services. They have tie-ups with more than 1 Lac companies worldwide to whom they provide fleet management services. Find out more about leasing for employees on aldautoleasing