Best tax-saving tips for salaried employees
Are you a salaried employee? We are sure you are looking for ways to save tax. It is your hard-earned money, after all. You would want the most out of it. Unfortunately, many people try to reduce their taxes in wrong ways. But there are some legal ways to do this. Here are some of the best tax-saving tips for salaried employees.
Understand tax laws
You must have heard about Section 80C, Section 80D, and Section 24 of the Income Tax Act. But what do these sections give you? How can they help you with your tax planning? Do your homework first. Speak to a financial expert. Then you will know how to benefit from these laws. First, you need to understand the benefits available. Only then can you get the highest tax breaks.
Investments are the best way to save tax. Are you a beginner? Do you need to know more about investments? You would need to figure out how the system works. Choose your investment tool carefully. Consider how much risk you want to take. Also, consider your savings and financial goals before investing. Start with a small amount. Then you will get a chance to explore the different options. You can do this without risking too much money. You can slowly increase your investments.
Insurance offers you a double advantage. It allows you to invest and save tax. It also builds a corpus for the future. Nowadays, insurance is essential for your financial security. So, get yourself and your loved ones sufficiently insured. This will also be good for your taxes. The premiums you pay for your life insurance and health insurance plans are tax deductible.
The main part of a home loan EMI is tax deductible. So, do not rush to close your home loan. A home loan is one of the best ways to save tax. Are you buying a house? Then take a home loan. Do not spend from your savings. This will help you save a lot of tax. Let us take a closer look at the tax benefits available here:
- Section 80C: Under this regulation, you can get a tax benefit of up to Rs 1.5 lacs on the home loan principal you pay.
- Section 24: According to this section, you get a huge tax benefit of up to Rs 2 lacs on the interest you pay for your home loans.
- Section 80EE: This tax benefit is exclusively for the first time home buyers. If your home loan is less than Rs 25 lacs and the property is less than Rs 40 lacs, you can expect a tax benefit of up to Rs 1 lac.
So analyse the various aspects of your home loan and see which sections of the Income Tax Act you can utilize to get the maximum tax benefit.
There are other ways of saving tax as well. You can submit your medical bills to your employer. This way, you can get a tax-free reimbursement. You can also get such benefits on your house rent allowance (HRA) and leave travel allowance (LTA). Speak to your employer about these options. Find out about the available reimbursements. These will also help you save a lot of tax.
The bottom line
Understand the various factors of tax savings. You will then be able to invest better. You will also be able to save the maximum amount of tax. Keep in mind these tips for salaried employees. Maximise your investments. Get enough insurance cover. And make sure to factor in the right reimbursements. Understanding the tax laws is important here. Take the right steps if you wish to save the highest amount of tax.