There are plenty of ways to save tax in India. However, many people don’t have knowledge on how to save taxes.
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Here are some of the tips and tricks that help you save taxes efficiently:
1. Income from Agricultural Land: Income from agricultural land is fully tax-free in India. So, any income you receive from farming activity or agriculture cannot be taxed. However, the agricultural income, as specified by the government includes:
2. Inheritance Through WILL: Any individual receiving money from an inheritance doesn’t have to pay income tax. There is no inheritance tax in India. So, any property received by an individual from paternal or maternal side is not taxable. The inherited sum or property becomes legitimate non-taxable income.
See Also: Income Tax Return Filing And Eligibility
3. Tax Saving Option Under Section 80C: The Government also helps salaried and non-salaried people save taxes on income earned in the year. The maximum tax deduction that can be availed under Section 80C is Rs 1.5 Lakh a year. You can use the following tax saving options to save taxes under Section 80C:
4. Additional Tax Saving on NPS Contribution: You can save tax on contributions made towards NPS account. Section 80CCD(1B) of the income tax act allows salaried and non-salaried individuals, enjoy an additional tax saving of Rs 50,000 a year over and above the normal tax deduction limit under Section 80C on investments in the NPS.
See Also: Income Tax Law And Income Tax
5. Tax Saving on Home Loan: There are three ways in which you can efficiently use your home loan to save income tax:
6. Health Insurance: Individuals can also avail tax benefit under Section 80D on the premiums paid towards health insurance. You can claim a tax deduction of Rs 25,000 a year on premiums paid for health insurance for self, spouse and dependent children. An additional tax exemption can be availed for paying health insurance premiums for parents. The amount depends on the age of dependent parents.
7. Income from Gratuity: Gratuity received from the employer on retirement from service or on termination or change of job after 5 years is tax free. A maximum gratuity of Rs 20 Lakh can be claimed and the amount is fully tax free. Gratuity is generally paid on retirement. But, gratuity can also be claimed in case of job change after a period of 5 years or on death of the beneficiary.
8. Interest Income on Savings Bank Account: The interest income on savings bank account is not taxed up to Rs 10,000 a year under Section 80 TTA. This is a great way of saving taxes.
9. Tax Saving on Education Loan: The interest repayments on education loan enjoy tax deduction under Section 80E. There is no specified upper limit on this amount. Sadly, this deduction is not available on the principal component of the education loan.
10. By Investing in Long Term Investment Options like PPF or SSY Scheme: PPF or SSY schemes are the most efficient ways to save taxes when investing for the long-term. These options offer the dual benefits of building a corpus through monthly investments as well as tax-saving. These schemes are taxed under the EEE tax regime. The amount invested enjoys Section 80C tax deduction up to Rs 1.5 Lakhs a year. Interest earned and amount withdrawn at maturity are not taxed. The PPF account can be conveniently accessed by any Indian citizen. But, the SSY scheme has certain restrictions as only the parents of the girl child can avail this facility.
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