Income Tax Saving Investments: If you are a tax payer then the question must have arisen in your mind at least once that how to reduce the payment of income tax? If you have taxable income then there is no way for you to avoid paying income tax. But you can manage your taxes and reduce the liability by making proper planning.
The special thing in this is that tax saving is related to investment and expenditure. In other words, income tax rules allow exemption from payment of taxes on certain investments and expenses. You can optimize tax saving investments and expenses every year to reduce your tax liability.
Know- What are the surefire ways to reduce tax liability
- If you are planning to pay less tax every year, then start planning and investing for your retirement now. Don’t think start it immediately.
- Income tax rules allow deduction of up to Rs 1.5 lakh on certain investments. If you invest fully in these options, your taxable income will be reduced by 1.5 lakhs.
- Your investment options for this benefit are schemes like PPF, NPS, EPF, Tax saving FD etc.
- Maintain and pay online medical bills of your senior citizen parents
- If you are living in a rented accommodation, carry rent receipts and rent agreement with you to claim HRA exemption to reduce your tax liability. If your annual rent is above Rs 1 lakh, then you also need your landlord’s PAN.
- You should take a health insurance policy for yourself and your family members. This will help you claim deduction on premiums paid under Section 80C and 80D.
- You can also invest in various Tax-Saving Mutual Funds (ELSS), which will help in getting the return on the amount invested and also you are eligible for deduction up to Rs 1,50,000 under 80C.
- However, you will be able to claim deduction for the size of your investment in tax saving mutual fund schemes only if your investment in other schemes eligible for deduction under section 80C is not already Rs 1.5 lakh.
- Under Section 80C, the total deduction that can be claimed in return for investment in all eligible schemes is Rs 1.5 lakh. Not more than that.
- You can also invest in NPS and claim an additional deduction of Rs. 50,000 under section 80CCD(1B). This deduction is available in addition to the section 80C deduction.
- Ask your employer to contribute to the NPS on your behalf. Your employer can contribute to NPS on your behalf. It is eligible for additional deduction (up to 10% of Basic Pay and DA).