7 Unique Ways to Save Tax Legally: Are you worried about paying Income Tax? Do you want to save more money and pay less Tax? Then for whom you are waiting, in this article, I will provide you 7 Unique ways to Save Tax Legally. As we all know that, Income Tax act allows some kind of deductions for all the classes of Taxpayers at the time of filing the Income Tax Return.
In order to Save Tax using deductions, the Taxpayer should have proper planning for that year. If you have done a proper Tax Planning for the year and if all the deductions fall under the Income Tax Act then that income will be deducted from the Gross Total Income and Income Tax will be charged on the rest of the Income according to the Income Tax slabs in Force.
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7 Unique Ways to Save Tax Legally
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1. Tax Planning through Home Loan
If the Taxpayer has taken a Home Loan then he/she can avail some of the benefits with respect to Tax Deduction. Detailed information is available below:
Section 80C: Here you will get a deduction on the repayment of the principal amount of the home loan taken. Under Section 80C, there are several numbers of policies and standards under which if you invest then you will receive a Tax Deduction of 150000 Rs. Under Section 80C, the investment plans comprise PPF account, Mutual Funds, Provident Fund, Life Insurance Policies, etc. Here Deduction will be provided based on the money spent for different investments. Also, the deduction will only be applicable on payment basis.
Section 24: Under this section, you are allowed to avail the deduction based on the principal amount of the home loan taken. The Maximum Deduction that is provided under Section 24 is Rs 2 Lakh on a self-Occupied property. Also, there are certain cases where there is no limit of availing the deduction for payment of interest on home loan.
Section 80EE: Under this section, you can avail extra deduction of Rs 50,000 for interest in the Home Loan. Here you will receive this extra deduction on and above Rs 2,00,000 under section 24 and Rs 1,50,000 under section 80C.
2. Invest your Gifted Money in a Tax-Free Instrument
Here, you can transfer your money to your spouse and non-working child and invest that money in a tax-free instrument such as ELSS, PPF & VPF, NPS, ULIPS, etc. Here, all the gift tax rules are not applicable on any of such relations.
3. By making Investment in various Funds, Donations, and Charity Setup organizations
In order to avail the deduction under the Section 80G, you will receive 100% deduction on the donation done for various purposes while in some cases you will receive 50% deduction on the donation made for several purposes.
Various Funds included under 80G include National illness assistance fund, National cultural fund, Fund for technology development and Application set up by the central govt, National foundation for communal Harmony, Indira Gandhi Memorial Fund, National Children’s fund.
Here you can only claim the deduction made using a cheque or a draft or in cash. If the donations are made using cash than you can claim only 10,000 Rs via deduction. Also, for all donations such as food material, clothes, medicines, etc are not applicable for deduction under the section 80G.
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4. By taking Educational Loan
When you pick the Educational Loan for yourself or for your spouse or your children you will get the deduction under the section 80E. Here you will get the deduction on the interest paid on the Educational Loan. Keep in mind, you will only receive the deduction on the Interest part of the EMI and not on the principal amount of EMI.
5. Claiming Medical Expenses
Income Tax on the basis of various provisions and sections provides deductions mainly on the basis of expenditure that is obtained by medical expenses of a taxpayer, his wife or any relatives as mentioned. All of these deductions are included in the Sections 80D, 80DD, and 80DDB.
Under section 80D, deductions are available for self, spouse and the children. While under section 80DD, the deduction is provided for medical treatment of handicapped dependants who suffers from a disability and under section 80DDB, the deduction is claimed for specific diseases.
6. Long Term Capital Gain from the sale of Equity Shares
In order to Encourage the common public to invest in various Mutual Funds and Equity Shares, the government has released the Income Tax for all the people who hold the shares for more than a year. If the shares are held less than a year than the person will be charged 15% Income Tax.
7. Tax Deduction under section 80CCG
If your Annual Income is less than 12 Lakh p.a. then you can get an extra deduction under the Section 80CCG when you invest in specific Mutual Funds and several stated companies. Under this Section Maximum Deduction of Rs 25,000 per year is available. Here you will receive a deduction under the Rajiv Gandhi Equity Saving Scheme.
Under this Section, the deduction is only available to certain investors only.
By following these 7 Unique ways to Save Tax Legally you will save a lot of Income Tax.
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