“Save Money and Money will Save You”
Tax filing can be tedious work for Taxpayers but eventually, it is a great source to save corpus out of it. The income tax Act provides enormous deductions for various investments, savings, and expenditures, done in a particular financial year. Many taxpayers still, end up not claiming these eligible deductions resulting in paying more in taxes.
There is a conception that one could only save taxes by making investments, but this myth is about to be broken now, as it isn’t necessarily true!
Let’s explore the smart ways to save taxes without making any investment.
- Children’s Tuitions Fees
As per the NSSO (National Sample Survey Office, education inflation in India stands at 10-11%, stating the fact that a sizeable corpus should be there to give quality education to your child. Now saying this, majority of expenses are consumed to children’s education. Hence, getting tax benefits associated with such a high cost would do wonders.
The good news for parents is that for their children’s education they can claim a tax deduction of up to Rs 1.5 lakh under Section 80C for the tuition fee paid. But this comes with a twist. The twist is that this benefit is only applicable to any full-time education plan imparted at any registered institution like schools, colleges, and even pre-schools and nurseries.
Under this scheme, the benefit is only applied towards the tuition fees and not to other costs involved in education. For instance, fees like development, late fee, etc., will not be accounted for tax savings.
The tuition fee paid for up to 2 children per taxpayer is applicable for tax savings. (eg. a couple consisting of 2 individual taxpayers can avail this benefit for up to 4 children).
- Taking a Home Loan
Who knew that your house can help you save money! Well surprisingly, entailing a housing loan is one of the best ways to save tax as it encompasses several deductions. Deductions up to Rs 1.5 lakh on home loan principal repayment under Section 80C can be claimed, and up to Rs 2 lakh on the interest repayment under Section 24B.
Under the 80C, the pre-paying option is available of the principal amount that could help you exempt up to Rs. 1.5 lakhs.
Considering the type of property you’ve bought, the amount you’ve bought, and the year of your loan sanction, you might end up becoming eligible for further tax deductions. This deduction can go up to Rs 50,000 under Section 80EE. Simultaneously, you could claim Rs 1.5 lakh under Section 80EEA on your loan interest repayment. In order to claim this, the loan sanctioned should be under Rs. 35 lakhs and therefore, the values of the residential property should not exceed Rs. 50 lakhs.
- HRA: Housing Rent Allowance
Are you monotonously paying rent to your landlord and not availing any monetary benefits out of it? Well, if you are salaried, then you can save some tax by paying rent to your landlord.
Well, if your employer provides you with a house rent allowance (HRA) then you can claim an exemption for the rent paid as per provisions stated in Section 10(13A) of the Income Tax Act.
In the case where there is no HRA received by the employee, then as per Section 80GG of the I-T Act, a deduction can be claimed for the rent paid in respect of accommodation occupied by the individual for his own residence. This could be up to Rs 5000 per month (subject to prescribed conditions).
- Medical expenses
Medical expenditures are unsolicited expenses that could arise anytime without any caution. However, the best thing is that Under Section 80D you are liable to claim deductions against premiums you paid towards health insurance policies for either self, spouse, dependent children, or dependent parents.
It is a crucial step to get your family health insurance, as not only it protects your family financially, but additionally, you save taxes with it too! Lasly, healthcare expenses incurred by a senior citizen, or for your senior citizen parents, you are liable to claim deductions up to Rs 50,000 assuming the senior citizen is not covered by health insurance.