In India, we pay several types of taxes to the government. They are broadly divided into direct and indirect tax. If you look at indirect tax, it covers every person irrespective of his financial status but direct tax like income tax is levied based on the income level of the person. Income tax provisions give you the opportunity to save tax without paying an unreasonably high amount of money as tax. But you need to know about these provisions to be able to save your money from income tax smartly. We at H&R Block India strive to make tax laws simple for you. Hence, we have created this blog to inform you about 10 popular tax saving schemes and options in India.
Here are 10 important points in that regard:
Your salary has several components which can help you save tax. Income tax laws give you the opportunity to save tax on various allowances offered by your employer like HRA, LTA, uniform allowance, car allowance etc. So whenever you discuss your CTC with your employer, ask him to make it as tax friendly as possible.
Section 80C of Income Tax Act covers the most popular tax-saving provisions of the Act. Tax benefits up to Rs. 1,50,000 are available to taxpayers under this section.
The money you spend on providing the best education to your kids can also be claimed as a tax deduction to some extent. I-T laws provide you with the opportunity to compensate the expenses you incur on their tuition fees by reducing your taxes. You can claim this deduction u/s 80C of I-T Act.
Medical expenses are unavoidable these days due to the unhealthy lifestyle of people living in cities. Your expenses on medical insurance, preventive health checkup and other medical expenses are eligible for tax deduction under section 80D of the Income Tax Act. Tax benefits up to Rs. 60,000 are hidden under section 80D.
For certain specific diseases, Income Tax Department offers tax benefits to the individual under section 80DDB on the basis of expenses incurred by him for the treatment of such diseases or ailment. Such diseases are mentioned in the I-T laws.
In case you are suffering from a disability or you have a family member suffering from a disability then your medical expenses are obviously higher than the general population. In such a case, you can take advantage of section 80DD and section 80U of Income Tax Act.
The interest you receive on your savings bank account is considered as your income and therefore it is taxable. However, you also get some tax deduction on the same income. Section 80TTA of the Income Tax Act offers tax deduction on interest income earned from savings bank deposit.
You will be glad to know that the burden of your home loan EMIs can reduce the burden of taxes. You can get the benefit on both principal & interest component of your instalments. You can get a deduction on home loan interest repayment under section 24 of the Income Tax Act and a deduction on the principal amount under section 80C. If you are a new home buyer or paying for your first house, then you can save the even greater amount of tax.
Due to rising costs of educational courses, people often go for education loans when it comes to higher education. Just like deduction available on tuition fees, your education loan EMIs also bring tax benefits to you.
There is another reason to rejoice when you make donations. You not only boost your karma & achieve inner peace but also earn right to claim another tax exemption. Section 80G, 80GGA and 80GGC cover various kinds of donations which are eligible for tax deductions like donations made to various charitable institutions, political parties, scientific research and rural development.
Here you learned about tax benefits available to those who get HRA from there employers. But do you know that tax benefit is available even if you don’t get HRA. Click here to know more.