Online platforms are great impacts on human life today. People totally depend on technologies. They love to shop from online sites rather than follow the traditional shopping methods. Buying anything...
Make sure to fully utilise Section 80 deductions
Section 80 is designed by the government to encourage saving for future and further invest the amount in insurance and retirement plans. The benefits of Section 80 are not limited to just lower income tax outgo for any financial year, but also to earn gains on long-term investments that prove to be valuable in the hour of need.
You can avail up to Rs 1.5 lac u/s 80C in a particular financial year by investing in Section 80C tax-saving investments. The deductions available in some of the key forms of 80C investments are:
Unit Linked Investment Plans (ULIPs)
Equity-Linked Savings Schemes (ELSS)
Public Provident Fund (PPF)
National Saving Certificates (NSC)
Principal Repayment of home loan
Life Insurance Premium payment
Senior Citizens savings scheme (SCSS)
According to the Income Tax Act,1961, Section 80D provides deduction on premium paid towards medical insurance. An investor can claim up to Rs25,000 under Section 80D in a financial year. These insurance policies can be for yourself, your parents, your partner, or your children. In case, one of the insured people is aged sixty or above, the tax deducted can be claimed for up to Rs30,000.
Think beyond 80C deductions
If your income exceeds Rs 2.5 lac, then apart from investing in Section 80C investments such as ELSS tax-saving mutual funds, you might want to focus on other investment options to lower your tax-outgo as well. You can choose from the following options:
Medical insurance – Under Section 80D of the Income Tax Act, an investor can avail a deduction on medical insurance premium of up to Rs 15,000 p.a. that is paid either for them, their spouse, or their children. Note that, you can also avail a deduction of up to Rs 15,000 for premium paid towards medical insurance of your parents. And if your parents fall under the category of senior or super senior citizens, the deduction amount goes as high as Rs 20,000.
Home loan – For investors paying interest on their home loan, they can avail a tax deduction of up to Rs 1.5 lac p.a. under Section 24.
Donations – Under Section 80G, an investor can claim a tax benefit up to certain limits for payments made towards donations to specific funds or institutions.
Consider restructuring your salary
Restructuring your salary and further adding a few components in it goes a long way in decreasing your tax liability. Restructuring your salary will help you to enjoy better benefits without the need for extra cash out flow.The following items can help a salaried individual in restructuring their salary:
- Individuals eligible for LTA (leave travel allowance) can claim it twice in a span of four years
- If you are living in a rental property, you can claim HRA (house rent allowance)
- You can also avail transport allowance of Rs 800 per month
- Food coupons such as Sodexo and ticket restaurant are eligible for tax exemption of up to Rs 60,000 pa
Though a lot of investors invest in ELSS fundswith the sole purpose of saving tax, ELSS mutual funds are so much more than that. They offer the dual benefits of tax-saving and capital appreciation to investors. So do not invest in ELSS, or any other tax-saving investmentjust to avail the Rs1.5 lac deduction. Happy investing!