How to save income tax in India?
Are you looking for some easy and effective ways to save income tax in India? – Then this article is going to be highly profitable for you.
All of you reading surly want to save taxes and I will help you out with saving a lot of taxes from this year. Truth to be told, most of the salaried or non-salaried people look for some awesome ways of saving income tax.
To encourage people like you, Government of India offers some of the best opportunities that will ultimately reduce your taxable income. Most of the such techniques are quite easy and you can start implementing them right away.
Therefore, without any further ado, let us explore some of the most awesome ways of saving taxes in India-
Interest on Saving Account
You probably will not know that interest amount on saving account is not taxable up to 10,000 Rupees. On the off chance that you earned 15,000 as interest from every one of your saving accounts, at that point you need to pay tax just on 5000 rupees.
Check out : Saving Account with Interest Rates in India
Benefit from Selling Shares or Equity Mutual Funds
In the event that you put resources into stocks or mutual funds then you can save 100% income tax on your profits. Try not to sell equity before one year. For instance, you put 100,000 in some stock and in 11 months, it ends up worth 1,20,000. At that time, in case you sell every one of them then you need to pay tax on that 20,000 benefit. But if you hold it for one more month, at that point you are not at risk to pay any tax on 20,000. (10% capital gain tax is recently introduce, if you earn profits above 1 lakh rupees after keeping shares for more than 1 year then you are entitled to pay 10% of the profit which is very less compared to other taxes.)
Scholarship for Education
Any sum got as a grant for education will help you save tax. It does not make a difference if the government gives that grant or any private trust.
Any wage that you get from Agriculture land is tax-exempt in India. Any lease got from land, income from farming items, profits from a farm building, etc. are exempted from income tax
Inherited Money from Will
You need not pay income tax on inherited income. Therefore, anything that you get from your forefathers through WILL is not taxable.
Tax Saving Alternatives under 80C Section
Section 80C offers the maximum saving of up to Rs. 1, 50,000. A couple of the choices are:
- Public Provident Fund
- National Savings Certificate
- Life Insurance Premium
- Equity Linked Savings Scheme
- 5 Year Fixed Deposit with Post Office and Banks
- Principal Amount Repaid on Home Loan
- Tuition charges paid for kids’ education, up to a most extreme of 2 kids
Check out: Best Strategies for Saving in India
Profits Received from Provident Funds (following 5 years)
This one is again a very popular means of saving tax in India. Fortunately, you do not need to pay charges on the premium you get from EPF/PF investments
Save Tax from Home Loan
You can utilize your home loan effectively to spare more taxes. The principal amount that you have re-paid in one financial year under 80C will save tax up to Rs. 1,50,000. The advantage on interest on home loan for First Time Buyers is Rs. 50,000 under 80EE.
Save Tax via Education Loan
You can save income tax using education loan and section 80E will help you in this. The interest that you pay on education loan is likewise non-taxable. Using education loan for higher studies is relevant for saving tax if taken for self, children or life partner.
Section 80 D allows you to save taxes on medical insurance. By producing bills of around Rs. 15,000 in one financial year, you can be able to save Rs. 5000. Furthermore, the amount claimed as the medical insurance for the parents above 65 years can reach up to Rs. 20,000. Within these limits, there will be no tax deductions required for medical purposes
- Check out: Best Health Insurance Companies in India
Leave Travel Allowance
Workers can use Leave Travel Allowance for the costs on domestic vacations. It will cover the expense of travel tickets that you purchase for you and your family that includes two children, your spouse, and parents in case they are also traveling with you.
Section 80U – Deduction for Person suffering from Physical Disability
Residential individuals who are suffering from physical disabilities or mental retardation can be availed with a deduction of Rs. 75,000, and an amount of Rs. 1,25,000 will be availed in case severe disability. Previously it was Rs. 50,000 and Rs. 1,00,000 for physical and severe disabilities accordingly.
House Rent Allowance
Your house rent will also help you save your income tax. You should live in a rented house and ought to get rent receipts from the tenant.
VRS benefits under section 10.10.C
Voluntary Retirement Scheme (VRS) is a very beneficial scheme which is generally applied to employees who have completed 10 years of service or is above 40 years of age. As per the guidelines of section 10.10.C in the Income Tax Act – 1961, any payment received by the employees during their voluntary retirement period is exempted from any tax deductions up to the limit of Rs. 5,00,000.
Giving Away Money for Charity
Tax can also be saved in India on your donations. If you donate to PM relief fund or some special NGO then they can provide you 100% tax saving in India.
Now, I hope that you would have found some easy and effective ways to save income tax in India. In case, you want me to elaborate on any particular tax saving method explained in this post, then feel free to update us about that. What methods have you been using till now for saving income tax in India? – Tell us in comments.