Tax adds extra burden to the people but paying tax is the responsiblity of good citizens and there are some methods to save tax. Some popular and useful methods of tax saving are as follows:
1. Insurance
Insurance is one of the most popular method of saving tax. Insurance helps to save tax in following way. The claim limit Rs 20000/- that means if you pay premium upto 20000 you can save tax with the help of insurance
How does Insurance help to save tax?
An example:
Suppose a single individual earns Rs 230000 per year and pays Rs 40000 premium per year. His income tax will be calculated by following ways
0-200000 = 1% i.e Rs 2000/-
For rest 30000 = Rs 30000 - Rs 20000 insurance premium limit = Rs 10000*15% i.e. Rs 1500/-
That means he'll pay Rs 3500 as income tax per year
If he didn't have insurance he would have paid
0-200000 = Rs 2000
For rest 30000 = Rs 30000* 15% i.e. Rs 4500/-
He would have paid in Total Rs 6500/- income tax without insurance
That means this person will save Rs 3000 per month with the help of insurance policy
Other methods includes Provident Fund, Employee Saving Fund, Citizen Investment Trust and so on
Source: http://dignepal.com/businessinnepal
See more at http://dignepal.com/businessinnepal/tax-saving
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