It is very hard to avoid taxes and paying taxes on your hard-earned money is quite challenging at end of the every financial year for all of us.
There are different types of taxes that we have to pay such as tax by state & federal levels, tax by Medicare, and social security, just to name a few.
However, there is a mess during the end of the financial years for submitting the insurance and rent receipts for saving taxes. But, if you wish you can save a good amount of money and from unnecessary tax stress.
If you want to save tax, there are different ways to save tax, to understand tax saving first you need to know the tax slabs.
In order to save tax you can invest your money in the saving schemes for future. Even you can use different allowed tax exemption category to save tax.
Here are the ways you can save tax in India. Let discuss…
Different Ways to Save on Your Income Taxes in India
You can use these tax exemption to save on your income tax in India. There are limits for saving tax under each category where you are allowed to save tax.
You can take these allowance as a reference to manage your finance and adjust the tax-saving strategy accordingly.
Invest in the National Pension System (NPS)
This is one of the simple ways to save on taxes by investing a fixed amount towards your national pension system (NPS). Deduction of INR 50K allowed for the national pension system (NPS) under Section 80CCD.
This investment (contribution) allows you to invest in equity & debt pension funds, by doing so you can create wealth for retirement that you can withdraw after the age of 60.
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Deduction on Interest Paid Towards Home Loan
If you bought home by taking home loans, you can save some amount on the interest paid towards your home loan. This allows tax deduction under Section 24 of the Income Tax Act in India.
The limit of deduction under this income tax act is up to 2 lakh per annum. If you are getting rent from the same property, there is no maximum limit.
Invest Some Amount for Future Planning
The interest amount received on the savings account is tax-free up to INR 10K per annum under Section 80TTA of the Income Tax Act. The limit for senior citizens is INR 50K for fixed deposit schemes under Section 80TTB of the Income Tax Act.
There is no better way to save income tax on the allowed exemption. Just you need to understand and find the ways to know the allow category for tax savings.
Save Tax on Health Insurance Premiums
The government allowed tax exemption on the premiums paid towards the health insurance policies for you and your family. You can save INR 25K for you and extra INR 25K for health insurance premium paid towards your parent health plan under Section 80D. For senior citizens, the limit is INR 50K.
Contributions for Charitable Trust
Tax deduction allowed for contributions to charitable trust under Section 80G of the Income Tax Act in India. There is a limit to the deduction under this category.
PPF (Public Provident Fund) Scheme
There is a good chance to save tax under the investment made for the future like PPF schemes in India. Interest earned on the invested PPF amount is tax-free. These are the long term investment scheme available for people to avail of tax benefits and secure futures.