Evading taxes – can this be even legal? Yes, it can be only under certain options, and it’s not the highly predictable 80C of the Income Tax Act if that is what you are thinking. If you can spare some time and familiarize yourself with ways to save taxes on income, you could watch your bank balance grow over time without an ounce of guilt feeling. So, stop sulking and keep reading as we have put together a list of legitimate ways to take home more.
You can also save taxes on your business income. MPVD & Associates, an audit and CA firm, specializing in tax accounting and NRI taxation services, can help you out. Enquire to know more.
Coming back to the practical tips, the upcoming section discusses some of the best ones you could take interest in.
Smart and Legal Ways to Avoid Income Tax in India
People are always hunting for opportunities to save money, part of which otherwise goes down in paying income taxes. Now, some do it their way by sticking to the traditional methods and ultimately miss out on productive alternatives. Others, like you, are more interested in exploring smart yet legal ways to save money on income tax. Without further delay, let’s begin.
- National Pension Scheme (NPS)
If there is a scheme that hits two targets with one arrow, it’s this one. By enrolling, one not only reaps benefits as amazing as saving taxes but plans for retirement as well. The plan is ideal for self-employed people working in the corporate sector who have exhausted the 80C limit and are willing to invest up to Rs. 50,000. If it’s not the case and you have not exceeded that limit, you could invest up to 20% of your annual income, where the maximum limit is Rs. 1.5 lakhs and then spend Rs. 50,000 to cover tax deductions. However, if you are salaried, invest less i.e. 10% initially followed by the same additional amount.
- Health Insurance Premium
The best present you can gift yourself and your family is a well-thought-out health insurance plan. In modern times, when inflation is rising unapologetically, it’s the most touching token of love to near and dear ones. Did you know it’s also a boon to those desperately looking out for ways to save taxes? The premium paid for self, spouse, children, and parents allows you to claim tax benefits.
- Repayment of Education Loan
Education loan is not just reliable financial support for parents finding it challenging to fund children’s education from world-class Universities but also a wonderful tax-saving tool. A tax deduction is available on the interest component. A tax benefit is accessible to whoever repays the loan. The great news is that there is no limit on claiming a deduction for paying interests. Probably, the only condition is to seek a loan from a recognized institution, unlike others who draw money from friends or relatives.
- Specified Disease Treatment
Certain diseases which require expensive treatments from well-recognized hospitals can also help you save on taxes. Begin by filing an ITR under section 80DDB and claim a deduction on tax liability. You can also apply for tax deductions when your dependents undergo costly treatments. The limit is anything within Rs. 40,000 for self and Rs. 1,00,000 for dependents. Make sure you have evidence of treatment like prescriptions or equivalent documents to claim a tax deduction.
- House Rent Allowance
This particular option is perfect for those who have shifted out of their hometowns for job purposes and paying out huge amounts for rent. They can avail of exemption on tax, irrespective of their status – self-employed or salaried.
Closing Thoughts:
Likewise, you can donate money to support a noble cause, apply for a home loan and do so much more to save taxes. However, the pointers discussed above are infallible. Proceed with the stated investments only when you need them and not just to ease your tax burden. In the end, you are sure to benefit from the schemes by reaching your financial goals and saving a part of your income that involuntarily moves into the account of the Income Tax department.