Top 5 Useful Ways to Save Income Tax
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Income tax is an essential part of every citizen’s financial responsibility. However, finding legal ways to save income tax liability can be beneficial. While there are may methods to save income tax in india , such as claiming deductions for investments and expenses, there are also some other strategies that you can consider. In this article, we will explore five different yet effective ways to save income tax in India.
Contribute more to National Pension Scheme
If you invest in NPS, you may claim tax benefit under Sec 80CCD(1) with an overall ceiling of Rs. 1.5 lac under Sec 80 CCE. Also you can claim an additional deduction of Rs.50,000 under Section 80CCD(1B) of Income Tax. So, to save taxes, increase your contribution to the NPS.
Wedding Gift
A wedding is a huge occasion in India. The couple receives so many gifts from the guests. Such gifts are exempt from taxation under Section 56(2). Gifts received on your wedding day, whether in the form of a gift, cash, or cheque, are tax-free. This means you can claim tax benefits on the gifts you receive from your friends and relatives.
Money Spent on Donation / Charity
Tax deductions can be claimed for charitable/ donations and philanthropic undertakings. Depending on the purpose, some donations are eligible for a 100% deduction, while others for a 50% deduction. However, you need to keep in mind that only donations made in cash or check-based donations are eligible for deductions.
Pay for Parents Health and Health Insurance
Section 80D allows a taxpayer to claim a deduction of up to 25,000 INR. It is available for paying the health insurance premium for yourself and your family. If you pay the premium of medical insurance for your parents, then you can claim an additional tax deduction u/s 80D.
Route your Investments through Parents
Senior citizens are entitled to special tax benefits. You can re-route your revenue from investments if your parents have a low income. So if you earn Rs.1 lakh in interest, instead of including it in your taxable income for the year, you can transfer the money to them tax-free. You can gift this money to your parents tax-free. They can reinvest it in lucrative senior citizen schemes like a Senior Citizen FD, Senior Citizens’ Savings Scheme, and more.
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