Everyone is looking out for ways to legally save taxes. Tax savings tips helps you plan your taxes effectively. Are you the one looking for ways and means to save taxes? I do understand it is complicated to understand taxes but here I share some awesome and easy tax saving tips.

Investment in Life Insurance:

Insurance is not a product which should be seen from the point of saving taxes. It is necessary in today’s life. You get a deduction of Rs. 150000/- in Section 80C of Income Tax. So if you fall in 30% tax slab, you directly save taxes worth Rs. 45000/-. Investment in insurance is also to be considered for retirement benefits and future planning. Term plan is best suited. It is normally advisable that if you are the only person earning in your family, you must have a term plan of atleast Rs. 1 Crore. Insurance is provided by all Banks. Ask your CA or the agent to advice you about the plans. Keep these two important benefits in mind, tax saving and retirement planning.

Save Taxes

Investment in Health insurance:

Health is the important focus today. What will you do if you have all the money and the lifestyle that you desired, but your health does not support you. Health is always to kept over wealth as later can easily be achieved if you have former. With the  spread of disease, investment in health insurance is a must. You get a benefit upto 50000, if you are below 60 years old and parents are above 60 Years old. 25000 self-benefit and plus 25000 if you invest for your parents.

If your age is 45 and your parents age is 62, you get a benefit upto 50000/-. Also 5000 Rs medical checkup is also allowed as benefit.

Always advisable to go for cashless Mediclaim. It is always helpful and go for a policy which gives you maximum benefits. Don’t see the premium amount but see the benefits, as a difference of Rs. 2000 annually in the premium amount is not be checked. We spend 1000 Rs a day sometimes to party with friends and chill.

Home Loan:

Do you know that the Home loan can save upto 100000/- worth of taxes? I am sure it shocked you, but here I explain how

Housing loan interest paid can be claimed upto Rs. 200000/-. So, if you have purchased a house and have taken a home loan, ask your bank to give you interest certificate for the financial year. This interest certificate shows the breakup of principal component and interest component of Home Loan.

Example: Principal Component: 250000/-, Interest Component: 300000/-

Interest on Housing loan can be claimed u/s 24 of IT Act of Rs. 200000/-

Principal component can be claimed upto Rs. 150000/- u/s sec 80C of IT Act.

So total benefit of Rs. 350000/- income can be reduced. Keep these things in mind, while filing your income tax return

Donation:

If you have donated any amount to trust or political party, ensure that you have taken proper receipt from them and the trust is registered for eligible donations so that you get a benefit under Sec 80G of the Income Tax Act. 50% benefit of the donation amount in the case of trust. However, you can claim 100% if you have made any donation to a political party and have the receipts of it.

80C Investments:

You can invest in equity linked mutual Funds, Public Provident fund and claim upto 150000/- if you do not have a housing loan or your insurance premium is not upto 150000/-. Also, the tuition fees paid for your children are eligible for deduction u/s 80C. Ty to legitimately save taxes in these ways.

Fixed Deposit:

Do you know, your funds can be safe in bank plus can save you taxes? If you do not want to take high risk like investing in shares or mutual fund, investing in Fixed deposit is always a safe option. If you invest in Fixed deposit for a period of 5 years, you get a tax benefit u/s 80C of IT Act. Also you can take Overdraft against that Fixed deposit for your business purpose in case required by you, The amount of taxes that can be saved is less, but atleast there would some savings.

House Rent allowance:

You can claim Rent paid to your tenant as a deduction for your Income tax purposes if you are a salaried person. Check the CTC Breakup given by your Company. In that, check the House rent allowance breakup given by your employer. Then see the rent you are paying to your tenant. Lower of two is the deduction that you will get. However, as per income tax there is a formula for claiming the HRA for tax benefits

  • The actual rent that is paid should be less than 10% of the basic salary.
  • In case you’re staying in a metro, 50% of the basic salary and 40% if you live in a a non-metro city.
  • The actual amount received as the HRA from the employer.

Also, there are HRA Calculators online, check any of them. Fill in the details and you will get know how much benefit you can claim.

Educational Loan:

Education expenses are increasing daily. Every parent wants their child to get the best education and why not? They are the future of tomorrow. For the best education, you may definitely take educational loan from a financial or charitable institution. So here comes a benefit.

Income tax act provides benefit to individuals taking the loan be it parent or the child. Also, the befit available is only of the interest paid on the loan. Principal component paid cannot be claimed for tax purpose. If a loan is taken from relative, then the benefit cannot be claimed.

Keep these in mind while filing your taxes.

Conclusion

I hope that the above tips help you plan your taxes better. Also keep in mind, that if you are a business owner, check your Form 26AS on income tax site to see if someone has deducted your tax. If you are a salaried person, ensure that you collect your Form 16 form your Employer to get a complete detail of the salary breakup and the taxes deducted.

Please ensure to file your income tax return as it has lots of benefits. I would soon be writing an article on it, so that you do not miss out such an important thing.

For any query, write back to us and we would be happy to help you.

Author Bio

Qualification: CA in Practice
Company: Makwana Sweta & Associates
Location: Mumbai, Maharashtra, IN
Member Since: 20 Aug 2017 | Total Posts: 62
A qualified Chartered Accountant with over 4 years of rich experience in Company Law, Audits, Accounts & taxation. She is a writer at her own blog https://insights.caswetamakwana.com/. She is keen in streamlining business accounts of the Company and provide Startup consultancy. View Full Profile

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