If you haven’t finished your tax-saving exercise for the financial year 2021-22 yet, you should do it as soon as possible because the deadline is March 31, 2022. Remember that if you do not make the tax-saving investments and expenditures, your tax liability for FY 2021-22 would be greater.
Some of the Tax saving Investment and Expenditure is as follows
5 Years Tax Saving Fixed Deposit
The five-year tax-saving fixed deposit is the easiest way to save money on your taxes online. You may simply invest in the five-year tax-saving bank fixed deposit if you have a KYC-compliant bank account and access to Internet banking.
Keep in mind that, while a product like this might help you save money on taxes and safeguard your assets, it won’t help you build wealth in the long run. This is because, for people in the 30% tax band, post-tax returns from bank FDs are frequently lower than inflation.
Term life Insurance
A term insurance policy or a unit-linked insurance plan (Ulip) can be purchased online. However, purchasing term life insurance online at the last minute may not be possible since you may be required to undergo medical tests or the underwriter may demand further information before providing you a policy.
The issuing date will determine your tax advantage for FY 2021-22. If the issuance date is after March 31, 2022, you will not be eligible for the FY 2021-22 tax advantage.
If you want to save money on taxes by creating a Public Provident Fund (PPF) account, make sure you start the procedure as soon as possible. As it might take a few days to open a PPF account with an authorized bank. If you already have a PPF account, you may effortlessly transfer cash from the connected savings bank account or another bank account via online banking.
Keep in mind that the maximum amount that may be invested in a PPF account in a single financial year is Rs 1.5 lakh.
Home loan Repayment/prepayment
There are two sorts of tax benefits available if you have an outstanding house loan. The principal amount repaid of a house loan is eligible for a tax deduction under section 80C of the Income Tax Act of 1961. In addition, under section 24 of the Income Tax Act, the interest paid on the loan is tax deductible up to Rs 2 lakh.
Prepaying a portion of your house loan might help you save money on taxes. Prepaying a house loan will allow you to maximise the amount of tax savings available to you. For example, if the principal amount repaid is Rs 1 lakh, one can fully use the section 80C deduction ceiling of Rs 1.5 lakh by making a home loan prepayment.
Prepaying your house loan can also save you money on interest because the total interest outgo will be lower because the loan term will be shorter. Your savings will be greater the larger the prepayment amount and the longer the term.
Health Insurance Policy
Individuals can purchase health insurance online from any general insurance company, a standalone health insurance firm, or an aggregator’s website. However, medical tests may be required, or the insurer may refuse to sell insurance online if you are above a particular age or have a specific quantity of coverage. In most cases, insurers allow people under the age of 45 to purchase health insurance coverage online.
Among other choices, such as PPF, EPF, Tax-saving FD, and so on, equity-linked savings scheme (ELSS) mutual funds have the lowest lock-in period of three years. Online investments may be done by going to the fund house’s website or via aggregator portals, but make sure you are KYC compliant first.
Though there is no maximum amount that can be invested, section 80C allows for a maximum deduction of Rs 1.5 lakh every financial year.