Its tax season and time for tax planning. If you want to save every rupee in tax, make use of the tax exemptions and tax deductions. There are plenty of tax benefits out there. You just have to find them.
A popular tax deduction is the Section 80C tax deduction. You can get a tax deduction up to Rs 1.5 Lakh a year under Section 80C. Take a look at your investments under Section 80C which may be the life insurance plan, the tax benefit on the home loan principal, children’s tuition fees or your contribution to the EPF. If you have still not exhausted the Section 80C limit, you may invest in ELSS, PPF, NSC and so on. Don’t invest in the Section 80C tax instruments just to save tax. Look at financial goals and check if the investment matches risk profile.
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National Pension System or NPS is a great tax saving investment. The contribution towards NPS enjoys the Section 80C benefit up to Rs 1.5 Lakhs. You also enjoy an additional tax benefit up to Rs 50,000 a year under Section 80CCD(2). Your employer can also help save taxes by contributing up to 10% of your (employees) basic salary to the NPS. This enjoys a tax deduction under Section 80CCD(2).
The health insurance plan not just insures against costly hospitalization, you enjoy a tax benefit on health insurance premiums for self, spouse, kids up to Rs 25,000 a year under Section 80D. Senior citizens enjoy Rs 50,000 a year under this Section. You can avail senior citizen health insurance plan for senior citizen parents and enjoy Section 80D tax deduction up to Rs 50,000 a year.
If you have availed an education loan for self, spouse or children, you enjoy tax deduction under Section 80E on education loan interest. There is no upper limit on this deduction. This deduction is available for a maximum period of 8 years. This begins from the first year of education loan interest payment and then for seven subsequent years, or till education loan is paid off, whichever comes first.
If you have availed a home loan to buy the dream house, you enjoy tax deduction on home loan principal repayment up to Rs 1.5 Lakhs a year. There’s an additional tax deduction on home loan interest repayment under Section 24 up to Rs 2 Lakhs a year.
If you are a first time home buyer, you can avail an additional deduction up to Rs 1.5 Lakhs a year under Section EEA on home loan interest. This deduction is available only on buying the house between April 1st 2019 to March 31st 2020. The stamp duty of the residential property must not exceed Rs 45 Lakhs.
Donations are not just about charity. There’s an element of tax saving too. You can claim tax deduction under Section 80G up to 50% or even 100% depending on which institution or authority you make the donations.
If you have bought your first electric vehicle by availing a loan from a bank or financial institution there’s good news. This is a deduction on interest payments under Section 80EEB up to Rs 1.5 Lakhs a year. This entices you to avail loans and buy electric vehicles to claim this deduction.
See Also: All You Must Know About Tax Planning
You must have the interest paid certificate and all the documentation like loan documents and tax invoice documents handy when filing ITR to claim the tax benefit.
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