10 tax-saving tips to help you through deductions in 2017
The end of the financial year is coming up. Are you feeling nervous? Does the tax amount from your salary seem too much? You could consider how you deal with income tax. Estimate your tax liability. This will make it easier to prepare for deductions. Does it still seem too much? Then look at the many ways to save tax in India. Here are 10 tax-saving tips to help you.
10 ways to save income tax
1. Inform your employer about your tax-saving plans (and ongoing process).
Create an investment plan for the year. Do this before sending your tax-saving declaration. Tick off each investment on your list. Give copies of the details to your employer. Do this before the tax deducted at source (TDS) process begins. This will help you avoid excessive TDS.
2. Make the most of tax-saving investments under Section 80C.
Save up to Rs 1.5 lakh under Section 80C. Invest in Public Provident Fund (PPF), National Savings Certificates, and tax-saving fixed deposits. Do you have a daughter? Then the Sukanya Samriddhi scheme allows you to save tax-free for her future.
3. Look at expenses eligible for exemption under Section 80C.
Do you have school-going children? Then expenses can be high. But you get an exemption for tuition fees. This is applicable for up to two children. Other exemptions include life insurance premiums paid for yourself, your spouse, or your children. Are you repaying a loan for buying or constructing a home? Enjoy tax benefits on principal repayments.
4. Add medical insurance to your financial plan to save on taxes.
Get exemption on medical insurance premium paid for yourself, your spouse, and your children. Enjoy an exemption of up to Rs 25,000 under Section 80D. You can get an extra Rs 25,000 exemption on premium paid for your parents. Are your parents senior citizens? Then the exemption rises to Rs 30,000.
5. Look at rent payments to cut down your tax liability.
Your house rent allowance (HRA) can bring tax benefits. Keep your rent receipts safe. You would need to show them to receive the benefits. Is your annual rent above Rs 1 lakh? Then you need to submit copies of the lease agreement and the landlord’s PAN card.
6. The interest paid on your home loan is exempt.
Enjoy exemptions on repayments towards your home loan interest. This is applicable on repayments up to Rs 2.5 lakh. Get this benefit for a self-occupied property under Section 24. Are you a first-time home buyer? Then you could get an extra exemption of Rs 50,000 under Section 80EE.
7. Your LTA and medical expenses could reduce your taxes.
Do you get leave travel allowance (LTA) from your employer? This can help you cut tax. Use this allowance twice every four years. This is for travel within India. Do you get a medical allowance from your employer? This can give you a tax exemption of Rs 15,000 per year. Get this benefit for your actual medical expenses during the year.
8. Use reimbursements from your employer wisely.
Many employers offer reimbursements. These are for conveyance costs, phone bills, newspaper bills, and so on. Find out what you are eligible for. Some employers may even sponsor training or workshops for your professional development.
9. Use capital gains and losses to tackle tax worries.
Do you own shares, gold, or property? Then you can receive capital gains on your investments. But suppose you face some losses during the sale of an asset. Set off the gains against these losses. Then you can save on your tax liability.
10. Be generous and donate to a cause.
Planning to donate to a cause? Find out whether donations to the charity allow 100% tax exemptions. Not all charities offer these benefits. You can always donate to the Prime Minister’s Relief Fund. Donations to political parties, scientific organisations, and religious institutions also bring tax relief.