If you don’t plan taxes well, be ready to pay more. To plan taxes, you have to know certain income tax laws, provisions and Sections. Saving taxes isn’t difficult. There are two types of taxpayers:
Want to know more on Tax Planning? We at IndianMoney.com will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. IndianMoney.com is not a seller of any financial products. We only provide FREE financial advice/education to ensure that you are not misguided while buying any kind of financial products.
If you wish to reduce your tax liability, then you should go through these points:
You spend a lot on children’s education. The Income Tax Act, 1961, rewards taxpayers by allowing them to claim tuition fees up to 2 children, as a tax deduction under Section 80C.
What if you don’t get HRA in salary? If you pay rent towards your own accommodation and you/spouse/ minor child or the HUF (of which you are a member) don’t own a residential property, you can still claim such rent as a tax deduction under Section 80GG of the Income Tax Act.
The interest portion of Home Loan EMIs up to Rs 2 Lakhs a year, can be claimed as a tax deduction under Section 24b.
The principal component of Home Loan EMIs up to Rs 1.5 Lakhs a year can be claimed as a tax deduction under Section 80C of the income tax act.
First time home buyers get an additional tax deduction of up to Rs 50,000 a year under Section 80EE for interest paid on Home Loan.
Interest paid on an Education Loan for self/spouse/children also offers tax benefits. The interest can be claimed as a tax deduction under Section 80E with no maximum limit.
Section 80CCC gives tax benefits if a taxpayer invests in an annuity plan for pension purposes from a fund referred to in Section 10 -23aab. However, the proceeds of these annuity plans are taxable in the year of receipt.
Section 80DD allows you to claim Rs 75,000 a year in special cases where expenses are incurred for medical treatment of dependents like spouse, children, parents, brothers and sisters with disabilities. This deduction goes up to Rs 1,25,000 a year in case of severe disability of more than 80%.
If you are suffering from a disability which is more than 40%, you get a deduction under Section 80U up to Rs 75,000 a year. In case of severe disability, this deduction is Rs 1,25,000 a year.
Section 80DDB allows resident taxpayers to claim a deduction for expenses incurred up to Rs 40,000 a year on medical treatment for specified diseases on self or dependents who can be parents, siblings, spouse, children (Rs 60,000 a year for senior citizen dependents and Rs 80,000 a year for super senior citizen dependents).
Any charitable donations made to institutions prescribed in Section 80G are eligible for tax deductions. Some donations qualify for 100% tax deductions and some others for 50% of the donated amount.
Cash donations beyond Rs 2,000 are not eligible for these deductions. Therefore, make donations above Rs 2,000 in a mode other than cash.
Section 80GGA of the Income Tax Act, 1961, offers tax benefits for donations made towards scientific research or rural development.
All taxpayers except those who have income or loss from business and profession can claim this tax benefit. Cash donations in excess of Rs 10,000 are not allowed as a tax deduction.
100% of the donations made to political parties (in modes other than cash) are eligible for tax deductions subject to conditions under section 80GGC.
Gratuity received by government employees is completely tax-free. In case of non-government employees, gratuity received by the employee or that received by the widow of the deceased employee, children or dependents is exempt up to Rs 10 Lakhs subject to certain conditions.
Meal coupons like Sodexho provided by employers are exempt up to Rs 2,600 a month.
Money received by government employees opting for the Voluntary Retirement Scheme (VRS) is exempt up to Rs 5 Lakhs.
If the profits of a partnership firm are distributed among partners, they need not pay any taxes. This is because the partnership firm has already paid taxes.
Any capital gains made on investments can be set-off against capital losses. Capital losses can be carried forward for up to 8 years.
Capital losses can only be set-off against capital gains and not any other income.
Long-term capital losses can only be set off against long-term capital gains.
Keep your Financial Cognizance up to date with IndianMoney App. Download NOW for simple tips & solutions for your financial wellbeing.
Be Wise, Get Rich.
This is to inform that Suvision Holdings Pvt Ltd ("IndianMoney.com") do not charge any fees/security deposit/advances towards outsourcing any of its activities. All stake holders are cautioned against any such fraud.