If you are under the income tax eligibility, then you will need to file your returns every year. However, there are many ways in which you will be able to get tax benefits if you are aware of the essential tax-saving strategies. A good tax planning strategy will always help you create your wealth and preserve your finances for the future. Here are some smart income tax-saving strategies that you need to follow in 2020.
Best Tax-saving Strategies to follow in 2020
Here are the best tax-saving strategies that you need to follow in 2020. Meanwhile, if you are wondering what is a Demat account, then you need to check the internet and know more.
Life insurance – Life insurance schemes are one of the best ways to reduce your tax burden. It not only helps you to cover up for your future but also provides several tax benefits. An individual needs to pay the required premium consistently in order to keep his or her life insurance policy active. The Life Insurance premium you pay is deductible under Section 80C.
ULIPs – ULIPs or Unit Linked Insurance Plans are the market linked products. You will get both the benefits of insurance protection and investment as well. The investment which you are going to make under this plan is officially eligible for a tax deduction and allows your money to grow consistently without any hassles.
Health insurance – Health insurance is also one of the best ways to expose yourself to tax benefits. The main objective of a health insurance is not only to protect you during times of medical emergencies but also to get tax benefits. Investing in health insurances can help you save taxes up to Rs.15000 – Rs.20000 p.a.
Mutual Funds – ELSS or Equity Linked Savings Scheme mutual funds are eligible for tax deductions and can help you to save a lot of money in the long run. These come with a lock-in period of three years, which is mandatory but they have much greater returns on investments when compared to other schemes like Public Provident Fund or Fixed Deposits.
Fixed Deposits – Even though the percentage of return is quite low when compared to PPF or Mutual Funds, fixed deposits are a great way to save a lot of money on tax returns. Some banks offer returns ranging from 6.5% to 7.45%. It is the most commonly used tax-saving tool.
So, now that you know the best ways in which you can save taxes in 2020, it’s time to take action. Find out the top five mutual funds or any other investment option that best suits your needs and start investing smartly.