6 Tax Saving Tips Without The Need For Investment

It is well known that tax saving avenues such as life insurance, NPS, PPF, ELSS, Sukanya Samriddhi Scheme, NSC, and others enable us to save money. However, most of us do not know how to reduce our tax liability without investing in any form of tax planning.

Tax experts say people can save tax on expenses incurred by them even if they make no specific investments for tax saving purposes under the Income Tax Act, 1961. The Income Tax Act, Section 80C, allows for a deduction of up to Rs 1,50,000 in a financial year under this section. As you can see, the following expenses are the best way to save tax under Section 80C:

Tips For Saving Tax

• Tuition Fees For Children

Tuition fees paid to universities, colleges, schools, or other educational institutions established in India may be deducted up to Rs 150,000 under the Income Tax Act. Individuals can deduct up to two children's full time education expenses. The deduction does not apply to payments made for development fees, donations, or similar expenses. Also, full time education includes pre-nursery, kindergarten, and nursery.

• Donation

Contributing to society and helping those in need is common when one donates to charitable organizations. Individuals who make donations to approved organizations are eligible to claim a deduction under Section 80G of the I-T Act. Some conditions determine if the deduction will be 50% or 100% of the donation. Those seeking a deduction must provide the recipient's name, PAN, and address, as well as the donation amount. In most cases, this occurs when a tax return is filed.

• Medical Insurance Premiums

A deduction is available under Income Tax Act Section 80D for premiums paid for medical insurance policies for oneself, one's spouse, one's children, and one's parents. There are different deduction limits applicable to different types of policies and to different ages of insureds.

Example: Individuals who pay for medical insurance premiums for themselves and their families (none of whom are senior citizens) can claim up to Rs 25,000 per year. Furthermore, senior citizens can take advantage of a higher deduction of Rs 50,000.

• Home Loan Interest & Principal Amount

Under section 24(b) of the Income Tax Act, individuals can deduct interest paid on home loans. It is possible to deduct up to Rs 2 lakh from the amount of rental income on self-occupied properties in a financial year. Also, you may be able to deduct principal component repayments under Section 80C. According to the old tax system, taxpayers can get this benefit for self-occupied properties.

• Interest On Education Loan

Section 80E allows individuals to deduct interest paid on education loans taken for themselves or their loved ones to pursue higher education. Those who qualify for this deduction must meet certain conditions. Deductions are available for 8 years after a loan is repaid, starting with the year in which the loan was repaid. As soon as the loan interest has been fully paid, the loan remains in effect for seven years or until the loan is fully repaid.

• Rent Paid

Section 10 of the Income Tax Act allows individuals who do not own a house but live in rented housing to deduct rent paid. An individual's salary and city of residence determine the maximum deduction limit.

Individuals can reduce their tax liability without having to invest any extra money by taking advantage of these provisions in the Income Tax Act. It's best to consult a tax advisor or financial advisor for specific information.

If you understand and utilize the Income Tax Act of 1961 provisions, you can save significant money on your taxes without making any new investments. You can reduce your taxable income by claiming deductions on tuition fees and donations and taking advantage of tax deductions on home loans and medical insurance premiums.

The most effective way to save is to document these tax saving tips properly. Taking advantage of the benefits of the Income Tax Act 1961 will maximize your savings.