10 Ways to Invest Wisely and Save Income Tax
Are you still trying to figure out ways to save tax? Tax saving is not as difficult as we think. We just have to be aware of things that we need to do to reap the tax benefits.
File photo of the Income Tax Building.
Are you still trying to figure out ways to save tax? Tax saving is not as difficult as we think. We just have to be aware of things that we need to do to reap the tax benefits. Also, it is crucial to declare investments at the beginning of the year to your employer so that accordingly, he can adjust the TDS (Tax Deducted at Source) and you get the tax benefits in advance rather than waiting for refund from the I-T Department.
Given below are 10 Ways to invest wisely and save income tax.
Home Loan: Paying EMIs for home loan can be a burden for you but the good news is that it can help you claim the tax benefits. You can claim the interest paid upto Rs.2,00,000/- on your home loan EMIs as an exemption from your taxable income. If you make any pre-payments to your home loan, then pre-paid principal upto Rs. 1,50,000/- can be claimed as a deduction.
HUF Account: If you are earning additional income apart from your salary, then it is taxable. However, if you open a Hindu Undivided Family account and show it under your HUF then you can save tax.
Tuition Fee Payment: We usually spend hefty amount of our income to pay for the education of our children. We can get tax rebate for the amount that we pay as tuition fee for upto two children.
Leave Travel Allowance: LTA given by your employer for the expenses that you and your family have incurred on travel within India can be claimed as deduction. It’s better to plan your vacation in advance and get the LTA benefits.
Health Insurance + Medical Expenses: You can claim tax benefit up to Rs.15,000/- for self, spouse and children and Rs.20,000/- for parents above 65 years of age. Additionally, you can claim upto Rs.15,000/- annually for medical expenses by showing genuine consultation and medicines bills.
Pension Funds: Fortunately, I-T laws provide you the opportunity to reduce your taxes if you are investing in pension funds.
Education Loan Repayment: Just like tax benefits available on tuition fee payment, you can also claim deduction for EMIs that you pay towards your Education loan. So investing in your education has more benefits than just upscaling your skillset.
Employee Provident Fund: Under section 80C, not only the interest, income and maturity amount of your EPF account is exempted from tax, but also the contribution that you make to the PF account can be claimed as deduction.
National Pension Scheme: NPS is one of the most secure investment options given by the postal department. You can claim tax rebate on the amount that you contribute to this scheme.
Donations for Charity: While donating for a charitable cause you not only get the inner peace but it also makes you eligible for tax exemption.
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