7 Ways To Save Income Tax On Your Salary
Follows these 7 Income tax saving hacks to save tax on your salary. Read now!
Every year, as a contribution towards the betterment of our country, we have to pay a certain amount as a tax. The taxable income completely depends on the net income of the taxpayer. There are different tax slabs introduced by the government. Even though paying taxes is compulsory, the Income Tax Act of India allows citizens to save on taxes via different ways of deductions.
Deductions
If you’re paying a huge amount of your income towards taxes and want to save them while following all the government norms, then you should pay close attention to the available tax-saving financial products.
As we said, an income tax can be saved once planned well. A salaried professional can save tax through sections 80C, 80CCC and 80CCD of the Income Tax Act. Some of the most common instruments are PPF Accounts, Pension plans, NSC, Life insurance policies etc.
Maximum Amount that can be claimed under Section 80C, 80CCC and 80CCD:
Under these sections, a citizen can save a combined amount of 1,50,000 on taxes. Also, citizens who invest in National Pension Scheme can claim an additional deduction of Rs 50,000 under Section 80CCD.
Ways to Save Income Tax
1. House Rent Allowance (HRA)
You can claim HRA to save on taxes. For rent which is less than 1 lakh in a year, proof of tenancy such as a rent receipt or agreement will suffice. However, If your total rent is more than Rs 1 lakh in a year, then you’ll be required to provide the landlord's PAN card as well.
2. Home Loan
If you’re planning to take a home loan, then you’ll save much on your taxes because section 80C of the Income Tax Act allows you to claim deductions on the repayment of the principal loan amount. Section 24 allows citizens to claim deductions on the interest they have paid on their home loans. In certain areas, a maximum of Rs. 2,00,000 is allowed however, some have no maximum limit.
3. Education Loan
You can claim deductions if you take an education loan for higher studies. You can also claim deductions when you take loans for your children or spouse. Section 80E of the Income Tax Act allows citizens to claim deductions on the interest amount, and there is no maximum limit.
4. Shares and Mutual funds
If you invest in shares and mutual funds, then you can save on tax. Under section 80CCG, people who earn below Rs 12 lakhs annually are allowed an additional deduction if the money is invested in shares of certain companies and some specified mutual funds.
5. Donations
You can save tax by donating money for social or charity purposes. Money can also be saved via investing in National Relief Fund. The deductions can be claimed under Section 80G.
6. Leave Travel Allowance (LTA)
If your employer provides LTA, then you’ll be entitled to tax-free LTA. An individual can claim the LTA two times in a period of 4 years. In order to claim this deduction, a citizen needs to travel anywhere within India during their leave period.
7. Medical Expenses
You can claim tax benefits on the amount you spend on your medical treatments. In order to claim, you have to keep your medical bills safe. You can claim an amount of Rs 15,000 per year. Section 80D, Section 80DD and Section 80DDB of the Income Tax Act allow deductions on the amount you spend to ensure your well-being. Having said that, the deduction amounts may vary as per the insurance policy purchased by the taxpayer.
Now that you know the most common Income tax saving hacks, it’s your time to plan accordingly!
