It is important to save taxes. There are various legal ways in which you can save on paying taxes.
Here are the top seven legal ways to save on taxes:
Invest your taxable income in a variety of schemes
There are variouares taxable income schemes where you can save a lot on tax by investing in them. By investing in taxable income schemes, you can easily claim all kinds of tax exemptions. Under section 80C, the income tax act will claim a deduction of 1.5 lakh from investment in various schemes. It will help you save a lot on your annual taxes.
Donations and charities
If you are trying to save a good amount of money on annual taxes, you can do the same through donations and charitable causes. The government encourages taxpayers to donate and help the poor. Donations to the PM Relief Fund or any notified NGO or political party can give you a 100% tax deduction as per section 80G of the ITA.
Plan for a home loan
When you plan for a home loan, you will get huge tax benefits. The interest rate that you pay along with the principal amount is eligible for tax benefits. You can check it with a home loan interest calculator. You can claim a tax deduction on the repayment of the principal loan amount under section 80C for an existing housing loan. You can get a deductible amount of up to 2 lakh when you take a home loan.
Save taxes on education loans when when
When you take an education loan, you can save a good amount on taxation. Tax benefits are given on the interest that you pay for the repayment of the education loan. There is no limit on the amount that you can get tax benefits on, but unlike a home loan, repayment of the principal amount will not be tax deduction eligible. It is important to consult with someone having years of experience in investment banking to get the maximum tax benefits.
Show your personal expenses
There are various personal expenses that can help you save on taxes. Some expenses include paying tuition for oneself and one's children, insurance premiums for oneself, one's spouse, or one's children, medical expenses for certain diseases, and the consideration of long-term capital gains in a tax-saving plan.
Restructure your salary
Various expenses you incur for the job are tax-deductible. However, not all benefits and allowances are available to everyone; they are given to employees as per their rank.
Invest in holiday travel
If your employer provides you with a travel allowance, you can claim a tax deduction for it as well.
Wrapping up
Use a home loan interest calculator to get the maximum benefits on taxation. The best home loan interest rate is available from non-banking financial companies upon meeting the eligibility criteria.
