You must be aware that if you are earning, you also have to pay the taxes to the Government. You must be happy with your salary increment, but increment also means from now you will have to pay more taxes. So you must know all about tax deductions under section 80c. If your annual income exceeds Rs. 2.5 lakhs, you are on the tax bracket. Ignoring taxes is not a good practice, but as your taxes are getting deducted, you can even claim it back.
If your annual income is Rs.5 lakhs per annum, and your tax rate is 5%, then you need to pay Rs 12,500 as income tax for the year. But, in case you have invested in a proper scheme, you can get tax benefits. Under Section 80C, your Rs. 12,500 amount will bring down to Rs.5,000.
The Section 80C of the Income Tax Act allows you to avail tax deductions up to Rs.1.5 lakh on the payments and investments.
Also have a look at: How much tax can you save under Section 80C, 80D, and 80G?
Fixed deposit is one such investment option, where you can get the tax benefits. When you take a bank FD for a term of 5 years, you can claim income tax deductions under Section 80C. Apart from tax-savings, FD is a safe and guaranteed investment option.
To know some other investment options with tax benefits, read:
These Smart Investments are Just What you Need to Save Tax this Year
Aman Khanna is an experienced financial advisor who is well known for his ability to foretell the market trends as well as for his financial astuteness. He has an MBA in finance from Toronto University as well as years of experience delivering seminars on sound financial practices and debt management.