Income Tax: 8 Unusual Ways That Can Help You Save Taxes

While most people are familiar with standard tax-saving methods like investing in PPF, ELSS or claiming deductions under Section 80C, there are a few lesser-known and unusual strategies that can help you save on your income tax.

Here are eight unconventional but effective ways to reduce your tax burden and maximise your savings. 

1) Pay Rent To Your Parents And Claim HRA

Living with your parents in a house they own? You can pay them rent and claim House Rent Allowance (HRA) as a deduction under Section 10(13A). Just ensure you have a formal rent agreement and your parents report the income on their tax return. This is a great way to save taxes while contributing to your family's finances.

 2) Buy Health Insurance For Senior Citizen Parents

Section 80D of the Income Tax Act allows you to claim a tax deduction of up to Rs 25,000 annually on health insurance premiums. For senior citizens, this limit rises to Rs 50,000. Additionally, you can claim an extra Rs 5,000 for preventive health check-ups. This benefit covers health insurance for yourself, your spouse, parents and dependent children.

The tax deduction is further broken down as follows — if you are below 60 years and have parents above 60 years, you can claim a deduction of Rs 25,000 for yourself and your family and Rs 50,000 for your parents, totalling a maximum deduction of Rs 75,000. If both you and your parents are above 60 years, the maximum deduction increases to Rs 1,00,000, with Rs 50,000 for self and family, Rs 50,000 for parents. 

3) Education Loan Interest, Even For Your Family Members

You can claim a deduction for interest paid on an education loan under Section 80E, even if you are not the student. This means you can take loans for your self, spouse or children or for a student for whom you are a legal guardian, and still claim deductions. This is an excellent way to support your family and save on tax.

4) Home Loan Prepayments

Many people forget that even home loan prepayments can lead to tax savings. Beyond the regular deductions available under Sections 24(b) and 80C for interest and principal repayment, part-prepaying your home loan can reduce your interest burden and still qualify for deductions. This helps in reducing your loan faster while saving taxes. 

5) Deduction For Donations Beyond Section 80C

Did you know that charitable donations are deductible under Section 80G, even if you’ve already maxed out your Section 80C limit? Donations to qualifying organisations or disaster relief funds can reduce your taxable income. Just be sure to get the receipt and check the eligibility of the charity for the correct deduction percentage.

 6) Invest In NPS For An Extra Rs 50,000 Deduction

While many people invest in the National Pension System (NPS) for retirement, not everyone knows about the extra tax benefits it offers. Under Section 80CCD(1B), you can claim an additional Rs 50,000 deduction on NPS contributions, which is over and above the Rs 1.5 lakh limit under Section 80C, making NPS a powerful tool for tax saving. 

7) Claim Leave Travel Allowance (LTA)

LTA allows you to claim tax deductions for domestic travel expenses incurred while on leave, up to twice in a block of four years. The main thing here is to plan your travel well and keep proper documentation like train or flight tickets and hotel bills. Many taxpayers miss this opportunity, but with the right planning, LTA can significantly reduce taxable income. 

8) Take Advantage Of Tax Benefits For Electric Vehicles

The government offers tax incentives for buying electric vehicles (EVs) under Section 80EEB. If you’ve bought an EV, you can claim a deduction of up to Rs 1.5 lakh on the interest paid on your loan for the vehicle. This is an environmentally friendly way to save tax while contributing to a greener future.

Tax saving doesn’t have to be limited to the usual methods. By making use of these above strategies, you can reduce your taxable income and keep more money in your pocket.