How to Save Income Tax?
Save Income Tax
There are different ways through which you can save tax. Some of them are:
Tax Saving Investment Options under Section 80C: The premiums paid on life insurance policies are eligible for deduction from taxable income under Section 80C resulting in tax saving.
Some of the other tax-savings options which fall under this section are Public Provident Fund (PPF), National Savings Certificates (NSC), Sukanya Samriddhi, National Pension System (NPS) and your child’s tuition fees.
Some of the other tax-savings options which fall under this section are Public Provident Fund (PPF), National Savings Certificates (NSC), Sukanya Samriddhi, National Pension System (NPS) and your child’s tuition fees.
By submitting rent receipts: If you are staying in a rented accommodation and receive House Rent Allowance (HRA) from your employer, you can claim deduction under Section 10(13A). The least of the following three will be allowed as exemption from taxable income before calculating the tax on total income :
1. Actual HRA received from the employer
2. The actual rent paid is more than of 10% of salary*
3. 50% of the salary if you stay in a metro city and 40% of the salary if you stay in a non-metro city
Salary= Basic Salary+ Dearness Allowance as per employment terms
However, under Section 80GG, if you do not receive HRA from your employer or do not own a residential house, you can get a deduction of house rent expenses from your taxable income. The least of the following three will be allowed as a deduction from taxable income:
1. 60,000 per annum(`5000 per month)
2. Rent paid minus 10% of the total income
3. 25% of total income for the year
1. Actual HRA received from the employer
2. The actual rent paid is more than of 10% of salary*
3. 50% of the salary if you stay in a metro city and 40% of the salary if you stay in a non-metro city
Salary= Basic Salary+ Dearness Allowance as per employment terms
However, under Section 80GG, if you do not receive HRA from your employer or do not own a residential house, you can get a deduction of house rent expenses from your taxable income. The least of the following three will be allowed as a deduction from taxable income:
1. 60,000 per annum(`5000 per month)
2. Rent paid minus 10% of the total income
3. 25% of total income for the year
By making a charitable donation: A donation made towards certain relief funds and charitable organisations is eligible for deductions under Section 80G. However, any donation made in items such as food material, medicines, etc., are not eligible for deduction.
By financing higher education: Under Section 80E, the interest paid on loan taken for higher education qualifies for a deduction from taxable income. The deduction is offered for a maximum of 8 years or till the time the interest is paid, whichever is earlier.
Who can claim this deduction?
Tax deduction under Section 80E can be claimed by an individual for a higher education loan taken for self, spouse, children, or a student for whom he or she is a legal guardian.
Deduction amount
There is no limit to the maximum amount that can be claimed as tax deduction under Section 80E. However, the deduction is available for a maximum of eight years or till the interest is paid on the loan, whichever is earlier.
Who can claim this deduction?
Tax deduction under Section 80E can be claimed by an individual for a higher education loan taken for self, spouse, children, or a student for whom he or she is a legal guardian.
Deduction amount
There is no limit to the maximum amount that can be claimed as tax deduction under Section 80E. However, the deduction is available for a maximum of eight years or till the interest is paid on the loan, whichever is earlier.
Life insurance as a tax saving tool : Life insurance plans help you save tax. Depending on the type of life insurance policy you choose, you can claim the following tax deductions:
1. The premiums paid under the policy are eligible for tax deductions under Section 80C of the Income Tax Act, 1961
2. Under Section 10(10D), payouts received under the policy are tax free subject to conditions prescribed under Section 10(10D) of the Income Tax Act, 1961.
3. The premiums paid towards critical illness benefit are also eligible for tax exemption under section 80D of the Income Tax Act, 1961
1. The premiums paid under the policy are eligible for tax deductions under Section 80C of the Income Tax Act, 1961
2. Under Section 10(10D), payouts received under the policy are tax free subject to conditions prescribed under Section 10(10D) of the Income Tax Act, 1961.
3. The premiums paid towards critical illness benefit are also eligible for tax exemption under section 80D of the Income Tax Act, 1961
