Taxes always bring upon a frown, be it income tax, Swachh Bharat tax or GST. No one likes taxes, but as a responsible citizen or under governmental pressure we have to pay these taxes. So the only solution is to reduce the burden by knowing about various tax saving techniques in India.
Ignoring taxes might be a blunder as last-minute tax filing could leave you baffled. But if you want to save yourself from this pain, then you should plan your tax saving. Therefore read on as we help you with certain techniques and advice from our team of financial planning experts.
Listed below are some insights into tax saving techniques in India for the FY 2018-19:
House Rent Allowance (HRA):
The minimum of the following three is available as tax relief (under Section 80GG):
• The HRA fixed by your employer.
• The actual rent paid, minus 10% of basic pay.
• For metros 50% of your basic pay and for non-metro 40% of your basic pay.
Paying rent, but HRA isn’t a part of your contract? The minimum of the following can still be legally exempted under Section 80GG:
• 25% of your total income.
• An amount of ₹5,000 per month.
• Any amount of rent over 10% of your total income.
Investments under 80C:
Under section 80C, a deduction of ₹1,50,000 can be legally claimed from your total income. Popular Investment Options falling under this section are:
• Life insurance premium (with the LIC or other private insurers)
• Unit-linked insurance (UTI & ULIPS)
• Equity-linked saving schemes (Mutual Funds)
• Kisan Vikas Patra
• Monthly Income Scheme (MIS)
• National Saving Certificates.
• Infrastructure bonds (Investment Under 80CCF)
Medical Insurance Premium ( 80D ):
“Health is wealth”, so why not safeguard your future health? According to Section 80D, you could be exempted from the following:
• An amount of ₹25,000 can be claimed for insurance of self, spouse and dependent children.
• An additional amount that can be claimed for insurance of parents is of ₹25,000 if they are less than 60 years of age and ₹50,000 if parents are more than 60 years old.
Person suffering from physical disabilities (80DD & 80U):
Under sections 80DD and 80U, a person suffering from physical disabilities or a relative looking after them can be exempted from the following:
• Expenditure on medical treatment of a physically disabled dependent relative.
• Maintenance of physically disabled dependent relative:
•When disability ranges between 40-80%, the fixed deduction is of ₹75,000.
•When the is disability is 80% or more, the fixed deduction is of ₹1,25,000.
Education Loan as a Tax Saving Technique (80E):
Education is the most powerful weapon we can use to change the world, this being said it would be criminal to pay more than what can be paid. Therefore Under Section 80E:
• An individual is allowed to be exempted from interest on a loan taken for pursuing higher education.
• The loan could be taken for the taxpayer for himself/herself, spouse or children.
One can avail its benefit till the whole interest is claimed, for a maximum time period of 8 years. There is no cap on the amount to be deduced.
Home Loan as a Tax Saving Technique ( 80EE ):
The government of India understands the value of your own house and helps you build your dream home. Most importantly it has given 1st time home owners a few advantages under Section 80EE:
• This benefit can be availed by only those individuals who are a first-time home owner.
• The assay of property purchased must be less than ₹50 Lakhs, where home loan varies anywhere less than ₹35 Lakhs.
• A relaxation of ₹50,000 can be claimed on home loan interest.
This is an added advantage to a relaxation of ₹2Lakhs permitted by Section 24, for a self-occupied house property.
Donations under Section ( 80G ):
Donations made under this section can be exempted by 100% or 50% if made to a trusted institution. According to section 80G:
• Donation made towards a social cause is 100% exempted.
• Donation made to a Trust/Religious place is 50% exempted.
India is home to numerous businesses and startups, consisting of thousands of owners and employees. But only 26% of Indians pay their taxes. We desire a salubrious environment, where we could prosper in life and live in harmony. To create a pleasant surrounding we need to pay and progress together.
Besides that let us pledge to be financially planned, and pay our dues.