The government receives a percentage of your earnings in the form of income tax. This tax is imposed on a yearly basis. This money is used by the government to carry out administrative activities. People are always looking for methods to save money on their taxes. Different People have their preferred methods when it comes to doing so. They sometimes adhere to the tactics they’re familiar with, and as a result, they miss out on more fruitful tax-saving opportunities.
Few methods to legally save your income tax in India are as follows:
- Getting A Home Loan:
Taking out a home loan has two advantages: it reduces your tax liability and gives you the satisfaction of owning your own house. Many government-mandated housing programmes, such as PMAY (Pradhan Mantri Awas Yojana) and DDR Housing Scheme, aim to make housing more accessible in India, whereas Section 80C and 24(b) lessen monetary obligation.
- Health-Care Policies:
Individuals and their families benefit financially from such insurances when their health is deteriorating. The government provides tax exemptions to encourage people to purchase such insurance policies, which allows them to receive high-quality care at prestigious medical institutes with little to no monetary obligations.
Higher returns on investments in the capital market and government-mandated schemes can contribute to wealth building as well as tax benefits. You can learn how to invest in various avenues to avail of tax exemptions in India under Section 80C.
Numerous government-mandated plans offer large overall returns as well as tax exemptions. Individuals can claim up to 1.5 lakh in tax exemptions on total annual income spent on such investments under Section 80C of the Income Tax Act.
- Invest in Life Insurance:
Tax exemptions are available on both premium payments and the amount disbursed at maturity for life insurance contracts. Section 80C of the Income Tax Act provides for premium payments, while Section 10 D provides for the sum promised at maturity or the insured’s untimely death, whichever comes first.
- If you live on rented premises, claim exemptions:
Section 10 of the Internal Revenue Code provides for tax exclusions under the House Rent Allowance (HRA) (13A). To be compensated your salary break-up must include the HRA component.
- Tuition Fees:
Tuition costs for your children are tax-deductible up to a maximum of Rs 1.5 lakh per year.
- Employee Provident Fund:
Employees in the organised sector are required to contribute 12% of their salaries to the Employees Provident Fund under the EPF Act. This deduction contributes to the Section 80C limit of Rs 1.5 lakh.
- Savings Plan for Senior Citizens:
The SCSS contribution is tax-deductible up to Rs 1.5 lakh also. SCSS is a 5-year programme for people over the age of 60. The SCSS rate is currently 8.7%, which is higher than the current FD rate.
- Support a Political Party:
Under Section 80GGC of the Act of 1961, contributions and donations towards the financial support of any political party are eligible for tax waivers and can be exempted from your overall income tax.
For more information about how to save income tax, you may contact our experts who will guide you through the entire process.