There are several things that have the capability to bring the spirit of human beings down. Income tax is the worst among them. There is no one that I’ve ever met who like paying taxes. But it is a necessary evil. An income tax is a tax that governments levy upon income generated by businesses and individuals within the area of their jurisdiction. By law, taxpayers are obligated to file an income tax return annually. Income tax is a major source of revenue for the government. Public services, obligations, and purchasing goods beneficial for citizens are some of the principal uses of income tax. We keep looking for ways to reduce our taxes. In the same pursuit, we bring you these tested (and legal) ways to reduce taxes on your salary-
Tuition Fees:
Your kids can come to your rescue when it boils down to saving taxes. The expenses you make on the education of your little ones can help you save on taxes. This deduction can be claimed under section 80C of the Income Tax Act.
House Rent:
Paying house rent is one of the most basic needs of a salaried individual. Especially for those who live away from their hometown. You can avail tax benefits as per the provisions of section 80GG of the Income Tax Act.
Home Loan:
If you are someone who is paying home loan EMIs every month, we have a happy news for you. Both the principal & interest amount of your monthly installments are subject to income tax benefits. And if it is your first house then you can get even bigger benefits. Section 24, Section 80C and Section 80EE cover these benefits.
Education Loan:
Slogging off those years in college can now actually pay you back. Not just in terms of a good job and life, but also tax benefits. Section 80E of the Income Tax Act lists down these benefits in detail.
Pension Plans:
You can reduce your taxes while you safeguard your future after retirement. These benefits are covered under section 80C, 80CCC, 80CCD(1), 80CCD(1B) and 80CCD(2) of the Income Tax Act.
Medical Insurance:
Medical insurance and health check-ups can get concoct a deduction of up to ₹60,000 under the section 80D of the Income Tax Act. To ensure that you are able to reap the benefits is that you can not pay the premiums in cash.
Medical Expenses Of A Disabled Dependent / Individual:
People with a disabled dependent can avail tax benefits under Section 80DD. This is the government’s way to help you in taking care of yourself or your disabled dependent. You save up to ₹1,25,000 from your taxable income using this facility.
Charity and Donations:
The government wishes for more people to donate for charitable causes and scientific developments. Hence, Section 80G, 80GGA, and 80GGC were incorporated in the income tax act to avail tax exemption from charitable activities and donations made for scientific research or rural development and donations to political parties.
Leave and Daily Travel Allowance:
LTA or Leave Travel Allowance can be claimed for two journeys in the cumulative span of 4 years. Expenses occurring during travel for which your employer gives LTA can be claimed as a deduction from Income Tax. Tax benefits up to ₹1,600 per month can be claimed through daily travel allowance.
Investments Under Section 80C:
⇒ Employee Provident Fund
Any contribution made to an EPF or PF account can be claimed as a deduction under section 80C. The interest incurred and the maturity amount that you shall receive from this investment is also exempt from tax once you have completed 5 years of service.
⇒ Voluntary Provident Fund
If you have an EPF account, then 12% of your basic salary goes in it as a mandatory investment. But you have an option to invest more than that as well. If you opt for that, you will earn interest at the rate of 8.4%.
⇒ Public Provident Fund
PPF is a good option if you looking for a long-term investment. Just like PF, you can get a tax deduction on the money that you have invested while generating a steady income through interest. Again, the interest and maturity amount is exempt from tax.
⇒ Sukanya Samriddhi Scheme
This is one of the best investment options for parents of a girl child. It not only presents tax benefits covered under section 80C and but also offers a higher rate of return on investment in comparison to PF & PPF.
⇒ National Pension Scheme
National Pension Scheme is an investment that the Indian Post Office offers. It is highly secure and prone to almost zero risks since it is backed by the Government of India.
⇒ 5 Year Post Office Time Deposit Account
One can open an account under this scheme with a branch of the Indian Post Office. Also, they are similar to any other fixed deposit account except that they have a lock-in period of five years.
Although taxes are a necessary evil in our lives, we can always reduce the burden by being smart. Always remember that the best time to start tax planning is the beginning of the financial year that is April.
