Save taxes: 5 ways to save taxes without insurance purchase or fresh investments, Here are 5 ways you can save on your tax without having to purchase insurance plans or invest in new tax-saving instruments.
We’re in the last few days of the financial year, and this calls for completing all your tax-saving tasks before March 31. During this time, we either invest in tax-saving insurance plans or put our money to work in tax-saving investments. But there are several ways to save taxes even without buying insurance and investments.
Before you start buying your tax-savers, do calculate your income tax. In this process, you’ll be able to identify tax-savings already done, and how much you need to, or can, save further. It will help you make a measured tax-saving decision. Here are 5 ways you can save on your tax without having to purchase insurance plans or invest in new tax-saving instruments.
1. CLAIM YOUR STANDARD DEDUCTION
From FY 2019-20, every salaried taxpayer is eligible to enjoy a standard deduction of Rs. 50,000 on their gross salary. This automatically reduces your taxable income. Also, unlike the erstwhile exemption components, i.e. transport allowance and medical reimbursement, you don’t have to submit any proof to claim tax exemption for standard deduction.
2. YOUR EPF CONTRIBUTIONS FOR TAX BENEFITS
Your Employees’ Provident Fund contributions will help you get deductions under Section 80C. The interest earned through EPF is also exempt from tax. However, from this year, a combined upper limit of Rs.7.5 lakh has been imposed on employer’s contribution towards EPF. This may affect those falling under the high-income bracket. Use an income tax calculator to check how much tax you have to pay on employer’s contribution. If your employer’s contribution is below Rs.7.5 lakh, you don’t have to worry about paying tax on your EPF.
3. SHOW YOUR HOUSE RENT TO ENJOY EXEMPTIONS
If you are a salaried individual living in a rented house, you can claim HRA (House Rent Allowance) exemptions. To claim HRA exemption, you have to provide rent receipts to your employer as a proof. However, HRA will be taxable if you are not living in a rented house but still receiving HRA as your salary component. Also, note that if your yearly house rent exceeds Rs.1 lakh, you have to provide your landlord’s PAN along with rent receipts as proof.
4. ELIGIBLE HEALTHCARE EXPENSES UNDER 80D AND 80DDB
Other than protecting you and your family against unforeseen events, health insurance also helps saving your tax liabilities. You can claim tax deductions under Section 80DDB and Section 80D for expenses incurred for treatment of specific diseases. For deductions under Section 80DDB, the deduction amount limit is set at Rs.40,000. You can get a maximum tax deductions of Rs.1 lakh under Section 80D, depending on certain factors.
For instance, under Section 80D, if you have a health insurance policy, you can enjoy tax deductions of up to Rs.25,000. Additionally, if you have bought health insurance for your parents and if your parents are below 60 years, you can enjoy an additional deduction of Rs.25,000 from your income. However, if your parents are senior citizens, i.e. above 60 years, you can get an additional deduction of Rs.50,000. So, look into these details and plan accordingly to minimise your tax liabilities.
5. TAX EXEMPTION THROUGH CHILDREN’S SCHOOL TUITION FEE
Your kid’s school tuition fee also qualifies for tax exemption under Section 80C. It falls within the maximum exemption you can claim under Section 80C, i.e. Rs.1.5 lakh. The tuition fee reduces your gross income which in turn reduces your total taxable income. However, the tax benefit applies for tuition fees paid for up to two children. So, for example, if you have four children, you and your spouse can claim tax benefits for two children each. In such a situation, the parent who’s responsible for paying the tuition fee gets the tax benefit.
There may be other tax allowances you qualify for, including interest paid on your home loan and contributions made toward charitable organisations, to name a few. Go through various exemptions you are eligible for, do a quick calculation with the help of an income tax calculator, and maximise your tax benefits.
(Disclaimer: The writer is Adhil Shetty, CEO, BankBazaar.com. The liability for the article solely rests with the author. The content has not been created or verified by India TV channel and IndiaTVNews.com)
