How To Save Tax - Top 10 Tips and Tricks
Invest in Equity-Linked Savings Schemes (ELSS): ELSS funds offer dual benefits of tax savings under Section 80C and potential wealth creation through equity investments. Invest in ELSS mutual funds to enjoy tax deductions of up to ₹1.5 lakh while aiming for long-term capital appreciation.
Utilize Section 80C Deductions: Maximize your Section 80C deductions by investing in various eligible instruments such as PPF, EPF, NSC, tax-saving FDs, and insurance premiums. Allocate your investments strategically to optimize tax savings within the ₹1.5 lakh limit.
Contribute to the National Pension System (NPS): Invest in NPS to avail additional tax benefits under Section 80CCD(1B). Enjoy deductions of up to ₹50,000 over and above the Section 80C limit, enhancing your overall tax-saving potential.
Opt for Health Insurance Premiums: Purchase or renew health insurance policies for yourself, your family, or your parents. Premiums paid towards health insurance qualify for deductions under Section 80D, offering tax relief while ensuring financial security in case of medical emergencies.
Claim House Rent Allowance (HRA): If you're a salaried individual receiving HRA, ensure you claim the maximum tax benefits by providing rent receipts and rent agreements. Utilize HRA exemptions as per Section 10(13A) to reduce your taxable income.
Explore Interest on Home Loans: If you have an existing home loan, claim deductions on both principal repayment (under Section 80C) and interest payment (under Section 24). Additionally, if you're a first-time homebuyer, utilize the benefits of Section 80EEA for additional interest deductions.
Optimize Tax-Saving Fixed Deposits: Invest in tax-saving fixed deposits offered by banks to earn guaranteed returns while enjoying tax benefits under Section 80C. Lock in your funds for a fixed tenure to avail of deductions on the invested amount.
Consider Donations for Charity: Make charitable contributions to eligible trusts, NGOs, or institutions to avail of tax deductions under Section 80G. Ensure you obtain valid donation receipts and certificates for the donations made to claim the benefits.
Review and Optimize Employee Provident Fund (EPF) Contributions: Evaluate your EPF contributions and consider increasing your voluntary contributions if feasible. EPF contributions qualify for deductions under Section 80C, helping you save taxes while securing your retirement.
Stay Informed and Plan Ahead: Keep yourself updated with the latest tax-saving opportunities, deductions, and exemptions available under the Income Tax Act. Plan your investments and expenses strategically throughout the year to optimize tax savings and achieve your financial goals efficiently.