How to Save Income Tax without Investment Legally?
Tax helps our government build our country. It helps build infrastructure and allows the government to function. By paying tax and paying it right, you take part in the process of building our country.
At the same time, saving on your tax is necessary as well. The government has enacted tax-saving rules to make sure that the ones who deserve a tax break, do get it. Hence, it’s a wise idea to make use of this to the maximum and save the most tax.
When you think about saving tax, most think about an investment option. But not everyone will have an option for that, or your investment horizon might be different from a tax-saving investment option. If this sounds like you, below are a few tax-saving options that you can try.
Child education fees
If you have children, you can save taxes on their education fees. This comes under section 80c of the income tax act of India, 1961, and you can claim a tax rebate for up to Rs.1.5 lakh for two children. Plus, if you have taken out a loan for your child’s education, you can claim a tax rebate on the interest you pay, according to section 80E of the income tax. This reduction can be claimed for up to 8 successive years.
Interest for your home loan
A place to call home is a dream for everyone, but for most of us, it comes with a loan. But what if we tell you that you can claim tax benefits for the interest you pay? This comes under section 80EE of the income tax act. This rule has some restrictions though. This is only applicable to the first house you are buying. Plus, the loan amount for the house should not be more than Rs.34 lakh and the value of the property shouldn’t exceed Rs.50 lakh. This is to ensure that the benefit is enjoyed only by the deserved. The maximum tax reduction here is capped at Rs.50,000.
House rent allowance
Section 10(13A) of the income tax act of India allows money paid towards house rents to be tax-free. This is one of the most popular non-investment tax breaks used, and it comes with some restrictions. It can be availed by both salaried and self-employed taxpayers. For HRA to be availed, you shouldn’t have any property on your own. The least of the below-mentioned amounts can be considered as HRA for a tax rebate.
- 40% to 50% of the total salary the taxpayer has
- The exact amount obtained as HRA
- Rent less than 10% of the employee’s salary
To avail of this tax benefit, you will have to obtain rent receipts and beyond a certain limit, you will have to file a receipt that includes the landlord’s PAN card number as well. You can make use of an income tax calculator online to make the math easier for you.
Medical expenses of senior citizens
This comes in handy if your parents are above the age of 50 and they don’t have medical insurance. In such instances, up to Rs.50,000 of tax rebate can be claimed for the medical expenses. This comes under section 80D of the income tax act.
Why should you claim a tax rebate?
Tax-break is something that you, as a taxpayer, deserve and that’s exactly why you should use it to the maximum benefit and cut down your taxes.
If you are confused about paying taxes, the best thing to do is to reach out to a tax expert. They will connect with you to help you understand the nuances and try to make the process easier for you. They can also help with things like choosing from the types of ITR and paying advance tax, which a lot of people find confusing.
Paying your taxes, including advance tax, on time is extremely important in the growth of the country and to steer clear of unwanted fines. Make sure you prepare documents for tax rebates and use tools like an income tax calculator before you file for tax, to make sure that you claim what you deserve!
