10 Best Ways to Save Income Tax
Salaried or Non- Salaried, everyone loves to save tax. Lets see 10 best ways to save income tax for upcoming years.
1. Claim tax benefits on rent payments
Salaried individuals who live on rent can claim tax benefit on HRA. HRA can be fully or partially exempt from tax. If you don’t live in a rented accommodation but still get house rent allowance, the allowance will be fully taxable. HRA exemption is also available if you live with parents, you can pay them rent. But your parents must include this rental income in their tax return. Don’t worry if you couldn’t submit rent receipts to your employer in time, claim HRA exemption at the time of filing of your tax return.
If you don’ t gets HRA in your salary also you can still get tax benefit as per the provisions of section 80GG of I-T Act.
2. Submit medical bills on time
Almost everyone gets a medical reimbursement of INR 15,000 as part of their CTC. By submitting doctor consultation, medicine bills or lab test bills, you will be able to avoid tax on this amount. Remember to submit bills on time to your employer, since this tax benefit can be claimed only through your employer.
3. Transport allowance as part of salary
Your employer can allocate your salary in such a way to provide you transport allowance. This supports your expense of commute between office and residence. Transport allowance of INR 1,600 per month or INR 19,200 annually can be exempted from tax.
4. Check for food coupons
Your employer can pay a portion of your salary as food coupon. Exempt upto INR 55 per day. So you can receive a part of your salary in coupons at INR 55 per day for 22 working days for upto 2 meals. This works out to INR 26,400 per year
5. Vacation bills can be submitted
LTA or Leave Travel Allowance can be used to save tax on fare expense for a trip made within India. LTA is not mandatory benefit, your employer decides your pay structure, which may or may not include LTA. This benefit can only be claimed via your employer so remember to submit LTA bills on time. Two journeys can be claimed in a period of 4 years.
6. Invest maximum under section 80C deduction
Claiming the entire INR 1,50,000 lakhs deduction available under section 80C can reduce your tax by INR 45,000 (calculation without considering cess). Life Insurance premium paid, school fees, EPF, PPF, ELSS can be claimed under 80C deduction. 80C deductions can be claimed directly in your tax return, these don’t have to be via your employer.
7. Medical Insurance for your family
Medical Insurance to secure yourself, your spouse and your children and claim a deduction of maximum INR 25,000. This is allowed under section 80D. You can also secure your parents and claim additional INR 30,000 for their insurance.
8. Repayment of home loan
Home loan EMIs can reduce the burden of taxes. You can benefit on both principal and interest component of your EMIs. All these deductions are covered under section 24, section 80C and section 80EE.
9. Repayment of Education loan
Education loan EMIs also bring tax benefits to you. Income Tax Act has separate provisions under section 80E to provide you this tax benefit for interest paid on your education loan.
10. Charitable donation
There is another reason to rejoice when you make donations. You not only boost your karma & achieve inner peace but also earn right to claim another tax exemption which is covered under section 80G. There is an upper limit on cash donations. Such donations are capped at Rs 2,000.