When you become eligible to pay the tax, during this initial period, you face a lot of confusion. Even the idea of paying a small portion of your hard-earned money as income tax sounds horrible. However, taxes are vital for the development of the nation and cannot be avoided. People are always looking for options to save the most taxes. No one likes to miss out on options that can save them money paid in taxes. Different people prefer different ways of doing it.
Here are some simple tips to effectively save taxes:
Use article 80C
In order to encourage the citizens of the country to adopt the habit of saving more taxes, the central government allows certain deductions on the amount invested in certain separate instruments under Section 80C. Some of the popular tax saving schemes are:
● Pension plans
● PPF accounts
● Equity UCITS
● Tax deposits over 5 years
● Life insurance policies or term plans
Most companies allow some salary components to be restructured to reduce your tax burden. “If you have a good relationship with your Human Resources (HR) department, talk to them about adding certain allowances to your salary. You may qualify for allowances such as medical allowance, transportation allowance, education allowance and telephone costs as part of your paycheck Also, opt for food stamps instead of a meal allowance, as they are tax-free until ₹60,000 a year,” said Gaurav Kapoor, director and co-founder of Fincorpit Consulting Private Limited.
Employees normally receive a rent allowance (HRA) in their income. If you don’t have this item included in your salary.” If you live in a rented house and receive rent allowance from the employer, then you, as an employee, can claim an exemption on HRA under the Income Tax Act,” said Amit Gupta, MD, SAG Infotech
Additionally, charitable contributions under Section 80G are deductible up to 10% of your income. However, you should make sure you get a receipt from the organization and a copy of its income tax exemption certificate rather than donating without a receipt, Gupta added.
Never miss a story! Stay connected and informed with Mint. Download our app now!!