Tax saving basically means analysing your financial situation by taking into account your income and expenditure and save money while paying taxes. Thus you can plan your savings well in advance rather than regretting it at the eleventh hour. It helps in reducing your liabilities too.

There are various tax saving options available for taxpayers, which provides exemptions and deductions in a bid to limit your overall tax liability.

Here are certain steps that you have to take in order to devise a profitable tax saving.

Analyse your income
The first and foremost step to begin tax saving is to analyse your total income. By accurately calculating your gross and annual income you can decide how to save tax.

How much of it is taxable
Some of the people might not know but all of their income is not taxable. There various variables like special allowance, house rent etc that are not taxable. Moreover, if you have made any investments, that too is exempted from taxation.

Avail tax deductions
Income Tax Act, 1961 offers various deductions under sections 80C to 80U, which is beneficial for taxpayers. These deductions can be availed against tax liabilities. You can invest in tax saving schemes like Public Provident Fund, Equity Linked Saving Schemes, life insurance, home loan etc. There are many other sections in the IT Act that can help in lowering your tax liabilities.

There are different methods of tax savings too. These are: