Top 5 Best Ways To Save Tax
Top 5 Best Ways To Save Tax
Income tax department allows all tax payers to Save Tax in legal ways,that exactly we are discussing here in this article.So that you can Save Tax legally.
Moreover some tax payers try to use illegal ways to reduce their tax,which in turn act as punishable offence.So please avoid such illegal ways and follow these 5 ways to cut and save your tax.
1. Save Tax under section 80C,80CCC and 80CCD of income tax
This is the first legal way to Save Tax under these sections.you can claim up to rs 150,000 and additional rs 50,000 under section 80CCD under new pension scheme.
Thus you can save rs 2 lack in this way.
Following are the most common investments under sections 80C,80CCC and 80CCD
- public provident fund
- GPF fund
- LIC policies
- Tuition Fee of two children
- National Saving Certificate(NSC)
2. Save Tax via Home Loan
Home loan is also a great way to reduce tax liabilities.Under section 24 of income tax you can claim deduction against principal Amount of home loan taken as well as Interest amount.
The maximum deduction under section 80C for principal amount is rs 150,000 and interest amount under section 24, of rs 2,00000 is allowed.
Thus home loan Under section 24 is a great source of reducing tax.
3. Save Tax under section 80D
If you have taken health insurance policy for yourself and any of your family members strictly including your spouse and dependent children, then you can claim deduction of premium paid against your policy.
Section 80D of income tax allows you to claim deduction of rs 25,000.
If you or your spouse is senior citizens then you can claim deduction of rs 30,000 under section 80D.
4. Save Tax using HOUSE RENT PAID
If the employee is staying in rented house and receiving house rent allowances from his/her employer then he/she can claim deduction under section 10(13A).
The least of the following three conditions employee can claim:
- Actual HRA received
- House rent paid -10% of basic pay including DA
- 50% of basic pay(If employee is living in metro city) and 40% of basic pay (if employee is living in non-metro city)
now if the employee is not receiving HRA from his/her employer then he/she can claim deduction under section 80GG of income tax from taxable income.
The least of following three conditions employee can claim as deduction from his gross taxable income:
- 60,000 rs per annum .
- rent paid – 10% of adjusted total income.
- 25% of total income of the year.
5. Tax saving against education loan taken under section 80E
If you are a Govt. employee and want to continue your higher education.Then you can take education loan for the particular higher qualification and thus you can claim that loan amount as deduction from you taxable income.
Further it is very important to note that loan amount can be of employee himself/herself,his/her spouse and dependent children.
moreover,only interest amount can an employee claim as deduction u/s 80E.repayment of principal amount is not allowed as deduction.
But there is no upper limit for interest amount meaning that employee can claim any amount as deduction u/s 80E.
You can also read Income tax on FD