Our today topic is to save money on taxes and that too while staying within the ambit of the law.
In today’s era, along with the means of earning, the taxpayer also pays a lot of attention to how to save tax. With proper information and strategic investment, you can reduce your taxes to some extent by following the tax laws of India.
Today we are going to tell you some such ways by which you can save some tax while following the tax laws of India which will be beneficial for you.
Tax Saving Options
1. By using under Section 80C
Section 80C is one of the most popular sections for tax saving in India, allowing you to claim a deduction of up to ₹1.5 lakh covering a range of investments and expenditures, such as:
PPF (Public Provident Fund) – It is a long-term investment with tax-free returns.
Life insurance premium – You can pay premiums for life insurance policies to save money on taxes.
NSC (National Savings Certificate) – It is a fixed-income investment plan.
ELSS (Expert-Linked Savings Scheme) – It is a shareholder fund with a lock-in period of 3 years for tax-saving.
Tuition fees – You can save money on taxes by paying tuition fees for up to 2 children.
2. House Rent Allowance
If you live in a rented house and have a rent receipt and a valid rental agreement, you can claim tax exemption under Section 10(13A).
3. Invest in National Pension System (NPS)
You can avail Indian tax section 80CCD(1B) to save money on taxes, wherein you can claim an additional deduction of up to ₹50,000 over and above the limit of ₹1.5 lakh.
NPS is a mix of equity and debt investments, making it ideal for long-term retirement planning.
4. Home loan repayment
Home loan repayment is also a good tax saving option as you can use Indian tax sections like you can use up to ₹1.5 lakh for principal repayment using section 80C and up to ₹2 lakh annually for interest payment using section 24(B).
Also, first-time homebuyers can avail an additional benefit of ₹50,000 under section 80EEA, provided the property value is less than ₹45 lakh.
5. Medical expenses and health insurance premium
You can also save money on taxes for health insurance premiums and health check-ups under section 80D.
Which offers up to ₹25,000 for those below 60 years of age and up to ₹50,000 for those above 60 years of age.
6. File your income tax returns on time
File your income tax returns on time so that you can claim all eligible deductions and penalties as well as refunds. Check all documents carefully.
7. Invest in tax-free income sources
You can invest in tax-free income sources to save money on taxes, such as –
By investing in tax-free bonds issued by the government.
Dividends from equity investments are tax-free up to Rs 10 lakh.
One of the best sources of tax-free income in India is agriculture.
8. Donate to Charitable Organisations
By donating to charitable organisations you become eligible for tax deductions under 80G.
Make sure the organisation is registered and gives valid receipts.
Donations made to some organisations are 100% deductible while others are 50% deductible.
Bonus Tip: Maintain Proper Documentation
To avoid inconvenience, keep the documents of all investments, donations or other expenses safe and take special care to have receipts for all of them so that you do not face any hassle later.
Conclusion
Our information is aimed at helping you understand the tax exemptions offered by the Government of India and invest in the right place so that you can take advantage of the provisions given under the Income Tax Act and save money on taxes and achieve your future financial goals.
Understand the strategies today and share your thoughts with us below.
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