In India, paying personal taxes is a necessity and not a choice. In order to ease the burden of tax on your monthly earnings, there are various tax-saving schemes available to you. These schemes not only help you save taxes but also result in a monetary benefit that can be used for future expenses like education, marriage, and retirement. In this article, we will discuss some important points regarding Rajkotupdates.news : Tax Saving PF FD and Insurance Tax Relief. It can substantially reduce your taxable income.
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Rajkotupdates.news : Tax Saving PF FD and Insurance Tax Relief – What is PF Tax Relief?
PF Tax relief / exemption are the tax benefits given to your employer to encourage them to contribute towards PF. Employers are allowed to deduct the PF contribution from their taxable income. This means that you will be paying less taxes as your employer shall be contributing towards your PF as well. So, while you are making the contributions towards PF, your employer will be making the same towards your PF from the taxable income. This benefits both you and the employer.
Insurance Tax Benefits
Insurance Tax benefits are offered to you by the government to encourage you to take insurance for your health and for the future of your loved ones. The government offers certain exemptions on the premium paid for health insurance policies as well as for life insurance policies. This means that you will have to pay lesser taxes as the government offers you certain exemptions on the premium that you pay towards the insurance policy. This benefits both you and the government. The most common tax exemption offered by the government on the premium paid for life insurance is called ‘Lapse of Policy’ tax benefit. This lapse is applicable when you have stopped the policy either due to death or the policy term ending. The government allows the insurer to claim tax exemption on the premiums paid towards the lapse of the policy.
Why invest in PF?
If you are a salaried individual and are employed by an organization that offers PF. Then it is highly recommended that you opt for PF as it is one of the best ways to save taxes in India. You not only get a great tax benefit by opting for PF. But also get a guaranteed return on your invested money. You can even avail tax benefits by investing in EPF and get an income tax deduction on the investment made. EPF is one of the best ways to save taxes as the investment made in the PF account is eligible for income tax deduction.
You can avail an income tax deduction of up to 15% from your annual income by investing in EPF. You can even invest in State Pension Fund (SPF) by your employer if it is applicable in your state. However, the income tax deduction on SPF investment is only up to 5%.
How to invest in PF to avail tax benefits?
There are two ways in which you can opt for PF account by your employer. Either by making a single lump-sum contribution or through a monthly salary deduction. Let’s discuss both the ways in brief:
- A lump-sum contribution: By making a lump-sum contribution towards your PF account, you will be able to avail all the tax benefits at once. This is a great way to invest and save taxes in one go. However, this option is recommended for those who have saved enough for their future.
- Monthly salary deduction: This is a great option for those who want to invest small amounts and want to save taxes on a regular basis. By opting for a monthly salary deduction, you will be investing a small amount each month. And will also get the benefit of tax deduction on the same.
Income tax deduction on investment in EPF and ShPP
If you are investing in EPF, you will get an income tax deduction of up to 15% of your annual income. So, if your annual income is Rs 10 Lakhs, you will be able to save Rs 1.5 Lakhs in taxes by opting for PF. Similarly, if you are investing in ShPP, you will get an income tax deduction of up to 5% of your annual income. Now, the question arises, how is this possible? Since PF is a retirement fund, your employer deducts an amount from your monthly salary and invests the same to your PF Account. This means that you are contributing towards your PF Account. However, the government is also offering tax benefits on the amount that your employer has deducted from your monthly salary. And has invested to your PF Account.
Rajkotupdates.news : Tax Saving PF FD and Insurance Tax Relief Conclusion
These days, it has become extremely important to save taxes and invest in a retirement fund. The best way to save taxes is by opting for PF and investing a small amount each month. You can also make a lump-sum investment by saving small amounts in a savings account. This will not only help you save taxes, but will also result in a great retirement fund. However, keep in mind that if you are an employee. It is your responsibility to make sure that your employer is deducting the PF contribution from your monthly salary. This is the best way to save taxes and secure your future.