Whether you are a first timer or a veteran tax payer, chances are high that you have been shelling out more in favor of Indian government’s tax exchequer than you ideally should. The very complexity of Income Tax laws scare petty taxpayers who choose to pay more taxes than learning about its intricacies. But in reality, once you understand the basics of taxation law you can benefit massively while claiming its exemptions and deductions. Today we are going to take a look at some easy ways which can be of great help in bringing down your income tax burden.
- Tax consultant in India suggest at spending a considerable portion of your income for the educational betterment of children. Deduction for the same can be claimed u/s 80C of Income Tax Act. You can also gain tax benefits by repaying education loan EMIs which are covered under section 80E of IT Act.
- Even if your employer doesn’t provide you with house rent allowance, you can claim tax benefit out of the same in accordance with the provisions of section 80GG of Income Tax Act.
- Your tax burden can actually be reduced through the home loan EMIs wherein you can benefit both from the interest and principal components of instalments. Tax advisory services hint at claiming deduction u/s 24, 80C and 80EE while adding more properties under your name.
- You need to initiate your retirement planning right from the day you start earning money and one of the best methods of doing the same is investment in pension funds. It is also possible to bring down your tax burden by contributing to certain earmarked pension funds which can be later claimed u/s 80, 80CCC, 80CCD(1), 80CCD(1B) and 80CCD(2).
- Online tax preparation take payment towards preventive health check-up and medical insurance into account whereby you can claim a deduction ranging up to 60000 INR u/s 80D. However, you need to be sure about not paying the premium in cash for benefitting out of the tax sections. Medical expenses incurred on a disabled dependent can be claimed under section 80DD allowing you to save up to 125000 INR. A disabled individual can also claim a maximum deduction of 125000 INR u/s 80U. Treating specific diseases such as AIDS and cancer might prove to be extremely expensive and that is why the Income Tax department of India offers tax benefits u/s 80DDB on incurring expenses for such treatments.
- While conducting tax planning in India, you can claim deduction u/s 80G although cash donations are capped at 2000 INR. Donations made for the purpose of rural development or scientific research can be claimed as a deduction u/s 80GGA.
- Contributions made towards PF or EPF account can be claimed as a deduction u/s 80C apart from serving as a lucrative investment option. The maturity amount and interest income is also kept completely exempt from tax on completing 5 years of service.
- While giving personal tax advice, professionals advocate registration into Sukanya Samriddhi Scheme which has already won accolades for being one of the very best tax saving options of modern times. You can also claim deduction for the same u/s 80C. The return offered is also higher when compared to PPF and PF. However, this scheme can be availed only by the guardians or parents of a girl child.
- While carrying your income tax planning in India, you can claim deduction on the house rent allowance portion of your salary especially if you are dwelling in a rented accommodation. You can also claim tax benefits out of your salary’s LTA component. LTA concession can be claimed over a block of 4 years and for two journeys. Travel expenses incurred for you and your family which gets reimbursed by the employer can be claimed as a deduction under the same.
Starting with these tax saving methods today can optimise your tax life in the long run. All it takes is a little more effort for understanding the tax planning strategies and that can assist you in saving taxes through legal means.