Your income tax liabilities go up with the growth in your income. Obviously, you want to minimize it as much as possible. Generally assumed, saving income tax needs backdoor methods with lots of illegal activities into it. But there is nothing like that. You can save your income tax with legal methods too. In this article, I will be sharing some of the key methods to ease the burden of Income tax on you. These are the basic things that often gets ignored, but implementing them can bring a significant fall in your income tax.
Table of Contents
- 1 Through Section 80C
- 2 Via NPS
- 3 Via home loan interest
- 4 Via educational loan interest
- 5 Via donations
- 6 Via treatment of particular life-threatening diseases
- 7 Via medical insurance
Through Section 80C
The Section 80C exclude you from income tax in the case of investments. Some of the most common investments are as follows.
- The contribution of your PF (Provident Fund)
- Housing loan principal amount
- Tuition fees of at least two kids
- LIC premiums of yourself or close family members.
- Investing in a notified scheme of 5-year deposit plans in a bank
- Through post offices, you can invest in NSC (National Savings certificates) schemes
- Though investment in Sukanya Samriddhi accounts for your daughter.
However, 80C has limits. Nearly all the 80C limits will get utilized by the PF alone in case the basic salary is more than one lakh per month.
You can save the income tax through NPS. It can contribute up to 10 percent of the salaried professionals, while 20percent for the self-employed individuals.
Via home loan interest
The property of up to 2 lakhs is considered as self-occupied. You can complete the construction within five years. At present, there is no restriction on renting out property. Although, it has been proposed in budget 2017 to put a restriction on renting homes. Now, this will restrict the interest amount one has to pay on his home loan.
Via educational loan interest
You can save your income tax through educational loan interest. At present, there is no limit on saving it.
You can save from 50 to 100 percent on the donated amount depending on various conditions. The organization to which you are contributing also decides it. In case, the donated amount is more than Rs. 2000 through cash, then there will be no income tax deductions.
Via treatment of particular life-threatening diseases
You can save income tax in case you have to get yourself or your dependents treated for specific life-threatening diseases like AIDS and Cancer. Usually, you can save up to a sum forty thousand rupees. In case, it is for older patients above the age of sixty years, then the saving amount goes up to sixty thousand rupees. While for people above eighty years, it is eighty thousand rupees.
Via medical insurance
You can save the income tax by opting Medical insurance premiums. However, it must cover your close family members that include you, spouse, children or parents. You can save up to twenty-five thousand rupees. If your spouse is more than sixty years old, then you can save up thirty thousand rupees. Well, if it is for your parents, then you can save up to twenty-five thousand rupees or thirty-thousand if they are more than sixty years old. However, this system doesn’t cover your parent-in-laws.