You can save tax in a number of ways, including:
1. The Benefits of Buying Life Insurance Include
Under Section 80C, life insurance premiums are deductible from taxable income, resulting in tax savings. The tax-saving options under this section include Public Provident Funds (PPFs), National Savings Certificates (NSCs), Sukanya Samriddhi, the National Pension System (NPS), and tuition fees for your children. Under this section, however, a maximum deduction of *1.5 lakhs can be claimed from taxable income.
2. You can protect your loved one’s health by insuring him or her
A deduction of up to *25,000 from your taxable income is allowed for premiums paid in any form other than cash in order to ensure the health of yourself, your spouse, and your dependent children under Section 80D. You can save more tax by paying the premiums on the health insurance policies of senior citizen parents, which allows you to deduct an additional *30,000 from your taxable income. Preventative health checkup expenses up to $5000 are included in this e filing of itr
3. Submitting rent receipts will allow you to
Under Section 10(13A), you can claim a deduction if you live in rented housing and receive House Rent Allowance (HRA) from your employer. However, you cannot claim more than one exemption.
- HRA received from an employer
- Rent paid is more than 10% of salary*
- If you stay in a metropolis, you will receive 50% of your salary, whereas if you stay in a non-metropolis, you will receive 40% of your salary
According to employment terms, salary consists of Basic Salary plus Dearness Allowance
In contrast, if you do not receive HRA from your employer or do not own a residential house, you can deduct house rent expenses from your tax return. The least of the following three expenses can be deducted from your tax return:
- An annual income of 60,000 (a monthly income of 5,000)
- Ten percent of total income minus rent paid
- The amount equals 25% of the total income for the year
4. Donating to charity
Donations made to certain relief funds and charitable organizations can be deducted under Section 80G. However, donations made to food materials, medicines, etc., cannot be deducted.
5. The following can be achieved by financing higher education
In general, under Section 80E, the interest on a loan taken for higher education qualifies for a deduction from taxable income for up to 8 years or until the loan is repaid.
6. Buying a house allows you to
Depending on your home loan interest, you may be able to deduct up to 2 lakhs from your taxable income. Under section 80EE, first-time homebuyers may also deduct 50,000 on home loan interest from taxable income provided the following criteria are met:
- FY 2016-17 should be the year when the housing loan is sanctioned
- 35 lakhs is the maximum loan amount
- It is recommended that the residential house value is less than `50 lakhs
- A home buyer should not own any other residential property
As a financial saving tool, life insurance can be useful
In addition to protecting your family against critical illness, disability, and death, life insurance is a crucial part of your financial portfolio. There are different types of life insurance plans, such as endowment plans, unit-linked plans, and term insurance, among others. The income tax law treats all of these products equally. Therefore, regardless of the type of policy you choose, you will benefit from the following:
- Savings on insurance premiums are possible under Section 80C. Maturity/death benefits are tax-free under Section 10(10D).
- A term insurance policy that offers critical illness coverage qualifies for a tax benefit under Section 80D
You can save both your time and your efforts by purchasing various tax-saving financial products online thanks to technology. It is fine to pay tax if you can’t invest in the right investment product, but never invest in order to save taxes. Do not invest just to save tax.