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Best Income tax saving Tips – Top 10

“A penny saved is a penny earned,” as the old adage goes. Tax planning is one of the most crucial step for lowering your income taxes and increasing your income. People are constantly looking for methods to save money on their taxes. Everyone wants opportunities to save money on their income tax. Varied individuals have different preferences when it comes to doing so. They sometimes adhere to the tactics they’re familiar with, and as a consequence, they lose out on more fruitful tax-saving opportunities.

Tax Changes Canadians Need to Know About for 2022 | Greedyrates.caThe income tax act allows a taxpayer of the nation to deduct certain investments, savings, and expenditures made within a given fiscal year. In this article, we’ll go through some ways you may save money on taxes.

These are the following Income Tax saving tips.

1. Health Insurance

The tax law allows for deductions for health insurance premiums paid for the self, spouse, dependent children, and dependent parents. As a consequence, it is possible to get health insurance for oneself and family members in order to help manage medical expenditures in the case of a medical emergency while simultaneously earning tax benefits on the premiums paid (Rs 25,000 for self, spouse, and dependent children; Rs 50,0000 for senior citizen parents, as applicable).

If they are not covered by health insurance, senior citizens may claim a deduction of up to Rs 50,000 for medical expenses incurred during the year.

2. Claiming a deduction for medical expenses, tuition fees, etc.

It’s worth noting that, in certain situations, tax benefits may be achieved in combination with specified costs, such as Rs 5,000 for preventive health check-ups, even if no new investment is made. However, the overall amount allowed under section 80D, which includes the above-mentioned health insurance premiums, limits the deduction for medical costs. Section 80C allows parents to claim a tax deduction for tuition costs paid for their children’s education up to Rs 1.5 lakh (within the total maximum of Rs 1.5 lakh).

3. Home loan

Bank charging high interest on home loan? Follow this method to reduce your  EMIIn India, a house loan tells you how to save tax five times. There are three methods to save money on taxes by taking out a house loan. A taxpayer will save a significant amount of money as a result of this. You may deduct the principal amount repaid in the current financial year under Section 80C. 

The amount that may be deducted is up to Rs. 1,50,000. Section 24 of the Income Tax Act permits you to deduct up to Rs. 2,00,000 in interest paid on a house loan. First-time house owners may receive a benefit of up to Rs. 50,000 under Section 80EE. If you’re still living in the house you bought with your first home loan, you can receive a second one. The tax deduction for the second house loan is unlimited.

4. Wedding Gift

A wedding is a joyful occasion for the whole family, especially the bride and groom. In India, the bride and groom are showered with presents on their wedding day. Section 56(2) of the Internal Revenue Code exempts such contributions from taxes. Gifts received on your wedding day are tax-free, whether they are in the form of a gift, cash, or cheque. These gifts may come from family or friends.

5. Donation

Donation Money Box - Free vector graphic on PixabayTax deductions may be claimed for charitable donations and philanthropic obligations. Contributions to the National Relief Funds, which may also be claimed under Section 80G, are included. Depending on the purpose of the contribution, certain donations are eligible for a 100% deduction, while others are eligible for a 50% deduction. Deductions are only available for contributions given in cash or by check. The Ministry of Finance has identified several organizations to which gifts may be made and for which tax deductions can be claimed.

6. National Pension Scheme (NPS)

For salaried workers in India, the National Pension Scheme (NPS) is one of the long-term tax-saving choices. It’s an investment strategy overseen by the PFRDA and the federal government. NPS is a good option for those who wish to prepare for early retirement and have a low-risk appetite. It also allows salaried personnel to take advantage of income tax deductions.

NPS investments may generate larger returns than PPF and Fixed Deposit (FD), but they are not as tax-efficient. Salaried workers may receive tax advantages under Section 80 CCD (1) up to a limit of Rs. 1.5 lakh under Section 80CCE. In other words, it aids paid workers in their tax preparation.

7. Educational loans and scholarships

Interest paid on loans for higher education, whether for oneself, a spouse, or children, is tax-free under section 80E. This amount is unrestricted. The amount of interest paid is the only thing that may be deducted, not the principal.

Scholarships or prizes given to students are free from taxation under Section 10(16) of the Income Tax Act. There is no limit to the amount that may be received, and the whole sum is used for the scholarship.

Tax Saving Tips - 15 Ultimate Tax Hacks in India to Save Income Tax!8. House Rent Allowance (HRA)

If you are a paid employee who lives in leased housing, you may save money on taxes by paying rent to the landlord. If your employer pays you a home rent allowance (HRA), you may claim an exemption for the rent paid under the requirements of Section 10(13A) of the Income Tax Act. Other persons, including in circumstances where the employee does not get HRA, may claim a deduction for rent paid in respect of housing inhabited by the individual for his own dwelling up to Rs 5000 per month under Section 80GG of the I-T Act (subject to prescribed conditions).

9. Long term capital gain

If you sell a long-term asset and reinvest the proceeds in specific instruments, you may be able to avoid paying capital gains tax. You must possess a long-term asset for at least three years to be termed a long-term asset. If you keep stocks, shares or mutual funds for at least a year, long-term profits are also tax-free.

10. HUF receipts

Hindu, Sikh, and Jain households are granted Hindu Undivided Family status. According to the Internal Revenue Service, a HUF is a distinct tax entity with its own PAN and tax-free bank account. This is in accordance with Section 10(2), which specifies that any sum received from these families’ income or estate is tax-free. A person is eligible to pay tax on their wage in their own name and put their secondary income into a tax-free HUF account.

Edited by Prakriti Arora

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