14 May 2020
Did this year’s tax leave you baffled? Did you feel like you paid way too much tax? Don’t blame the government or its policies, at least not yet! You may have overlooked a few essential things when filing your tax returns, which has resulted in low returns. Read on to what they are and steer away from them!
Taxes are a complicated thing all over the world and India is no different! The Income Tax department of India allows certain tax exemptions which can help you save money on your tax returns. These tax rebates are for tax payers from all walks of life like professionals, business persons, salaried people and independent earners as well.
With a little planning you can easily get more money back from your tax returns. Here is how you can do it!
# Make Tax-Saving Investments
The Government of India has made provision for tax exemptions on certain type of savings and investment that also encourages tax payers to save more money. An individual can invest in schemes under the Income Tax Act of section 80C, 80CCC, and 80CCD, which allows a deduction of up to 1.5 lakh INR from the tax.
Throughout the year, tax payers, like you, can invest or save money in schemes like the PPF account, 5-years fixed deposit, pension plan, mutual funds, employee provident fund, life insurance policy and national saving certificate. You can either opt for one or combination of these schemes to save more money on your income tax returns. But, remember that the maximum tax exemption allowed is only 1.5 lakhs INR.
# Medical Insurance
Income tax exemption is allowed on the investment towards the health insurance policies. Under the sections 80D, 80DD and 80DDB, you can buy a health insurance policy for yourself or family members and enjoy the tax benefits that come with it.
Under the section 80D, you can save up to 75,000 INR on the health insurance or medical treatment of your dependents like spouse, children, and siblings who have disability.
Under the section 80DD, an exemption of 30, 000 INR is allowed on the medical health insurance of senior citizens above 60 years of age.
Under the Section 80DDB, anyone who is dealing with specified critical illness, can claim tax exemption up to 40,000 INR. Senior citizens above the age of 60 can claim a tax rebate of 60, 000 INR and super-seniors above the age of 80 can claim a rebate of 80,000 INR.
Phew! Too many facts you think? These are need-to-be-known though!
# Tax Savings from Business Profits
If you are involved in any business, then you need to pay a tax which is a difference between the revenue earned and expenses. But, if you want to save on your taxes, then you can invest money in stocks!
Under the Income Tax Act, Section 35AD, enterprises can avail tax benefits if they invest in new ventures. Stocks are a great way to invest money based on your long-term goals.
# Save Money Through Home Loans
If you have a home loan in your name you can save money on your tax returns.
Did you read that right? Yes!
Under Section 80C of the Income Tax Act, an individual can claim tax exemption for settling the principle amount of home loans. Additionally, under Section 24, you can also claim tax-exemption on the interest paid on home loans.
# Tax Exemption through Education Loans
Education loans are also one of the best ways to save money on your tax returns. If you have availed an education loan for yourself or any family member, you are allowed tax-exemption on the interest of the loan.
Remember that the tax exemption is only allowed on the interest and not on the principle amount, and it is for the individual tax payers only and not for the Hindu Undivided Family.
# Long-Term Equity Shares
Again, the Government of India has made provisions for tax-exemptions of long-term equity shares to encourage people to invest in mutual funds and equity shares. If you invest in long term equity shares you can claim tax exemption on the money you earn over the years.
With the government itself coming up with several tax-saving schemes and lending you a helping hand, what’s stopping you? Make wise financial choices, save more, invest more while enjoying various tax-saving benefits!