Tax season can be a stressful time for many individuals in India. However, did you know that there are several lesser-known ways to save taxes and potentially reduce your financial burden? In this article, we will explore ten strategies that can help you save taxes and maximize your savings.
- Invest in National Pension Scheme (NPS)
Contributing to the NPS can provide you with an additional tax deduction of up to Rs. 1.5 lakhs under Section 80CCD(1B) of the Income Tax Act. Moreover, the NPS offers the advantage of long-term retirement planning.
- Utilize the Tax Benefits of Health Insurance
Under Section 80D, you can claim deductions on health insurance premiums paid for yourself, your parents, and your family. Make sure to explore the available deductions and choose the most suitable health insurance plan.
- Take Advantage of House Rent Allowance (HRA)
If you are living in a rented house, you can claim deductions on your house rent allowance (HRA) under Section 10(13A) of the Income Tax Act. Ensure that you have proper rental agreements and receipts to avail of this benefit.
- Invest in Tax-Saving Fixed Deposits (FD)
Tax-saving fixed deposits offered by banks provide a tax deduction of up to Rs. 1.5 lakhs under Section 80C. These deposits have a lock-in period of five years, so choose wisely before investing.
- Opt for Tax-Saving Bonds
Government-issued tax-saving bonds, such as the National Savings Certificates (NSC), offer tax benefits under Section 80C. These bonds have a fixed tenure and can be a secure investment option.
- Claim Deductions on Education Loans
If you have taken an education loan to fund your or your child’s higher education, you can claim deductions on the interest paid under Section 80E. This can help reduce your taxable income significantly.
- Take Advantage of Leave Travel Allowance (LTA)
LTA allows employees to claim deductions on expenses incurred during domestic travel. Ensure that you maintain proper documentation, such as travel tickets and bills, to avail of this benefit.
- Utilize the Deductions for Donations
Donations made to eligible charitable institutions and organizations can be claimed as deductions under Section 80G. This not only helps reduce your tax liability but also contributes to a noble cause.
- Explore the Tax Benefits of Home Loans
Home loans offer various tax benefits, such as deductions on principal repayment under Section 80C and interest paid under Section 24(b). Make sure to understand the provisions and claim the maximum benefits.
- Opt for the New Tax Regime (Optional)
Under the new tax regime introduced in 2020, individuals have the option to forego exemptions and deductions but pay taxes at lower rates. Evaluate your financial situation and choose the tax regime that suits you best.
Saving taxes doesn’t have to be a daunting task. By exploring these lesser-known ways to save taxes in India, you can potentially reduce your tax burden and maximize your savings. Remember to consult with a tax professional or financial advisor to ensure you make informed decisions and take advantage of all available tax-saving opportunities.