How to save Income Tax: All of us want to save money as much as we can, provided it is legally correct. How to save Income Tax is probably one of the most searched phrases when it comes to saving money for taxpayers. All of us should always pay our income tax as it goes in nation-building and strengthening the economy. But, intelligent, planned and strategic investments can help us save some money to pave the way for a financially secure future. Ravi Singhal, Vice-Chairman, GCL Securities Limited shares his knowledge tax savings options for FY 2021-22 and lists out ways that every taxpayer must explore in order to save some income tax:-

Avail maximum benefit of 80C: If you are planning to save income tax, then you must avail the maximum benefit under 80C (Rs 1.5 lakhs per annum, as of now). One can freely choose saving instruments of their choice, like people not willing to take financial risk may go for 5-year Tax saver FD, Life insurance policies or other investment products offering fixed returns. Those who don't shy from taking risks can invest in Mutual funds under ELSS categories. There is no difference in the performance of ELSS and a normal mutual fund, except for the fact that there is a lock-in period of 3 years in ELSS category funds.

Never ever ignore 80CCD: One should also consider utilising maximum limit under 80CCD (Rs 50k as of now) to save Rs 15k by investing in NPS (National pension System) scheme or APY (Atal Pension Yojna). There is a myth that NPS gives very low returns as compared to other available products, which is absolutely wrong. You can compare the performance of all funds under this category and can choose the fund of your choice. 50% of your funds are deployed in these market-linked products and 50% in debt instruments like government bonds. This ratio is changed by fund manager every year and 100% of your funds parked in debt market till retirement. As assessee already saving 15,000 in tax so whatever you are earning is actually earning on 35,000, so your actual returns are much higher if you save under this category. However, the products under 80CCD are pension funds only, so there are some restrictions on withdrawal of funds, you must consider it before investing.

Triple benefit of home loan: Owning a home offers the triple benefit of house rent saving, property appreciation in the long term and tax benefits. If you are staying on rental property, then your rental expense is going to increase every year, whereas your EMIs is almost fixed (if interest rates do not change) Finance minister Nirmala Sitaraman in her Budget 2021 has extended timeline for availing additional tax benefit of Rs 1.5 lakhs under section 80EEA. Under ‘Housing for All’, the government is giving tax deduction benefits of up to Rs 3.5 lakhs (Rs 2 lakhs under section 24), which cannot be ignored.

Moreover, you can save tax under multiple sections as per the following schedule if you buy residential property:-

So If you claim all tax in all above components, you will be able to claim a maximum income tax deduction of Rs. 5 Lakhs 

Moreover, let's take a look at summary of other options to save income tax:-