Looking for income tax saving tips to save more money? Did you know the basic of Indian income tax? Do you know the the current income tax slab for FY 205-16?
Paying income tax is our liability, one can’t avoid that. But if you know all the rules and exemption limits then you can plan your investments and save more money by paying less income tax.
In this article I will share few basic tips to save more money by planning your investment. These are nothing new or out of the box tips, but most of the time people forget to follow them even if they are so easily available. easily.
Life saving Income tax saving tips
There was always scope to restructure our Income tax slab as well as various rules linked with investments. Finally in the last budget we found few changes, although it’s not 100% satisfactory. But still this change is enough to save few extra amounts. Let’s find out income tax saving tips that you can consider this year.
1) Save more income tax under section 80C
Section 80C is the most popular section when it comes to save Income tax. Last year the limit of saving has increased from 1,00,000 to 1,50,000. So one can straightway save more 50,000 amounts to save more income tax. But you have to be very careful as in this section most people confused how to invest money and save more tax. The best part of section 80C is that one can invest in the market’s best financial products with almost zero risk. Few such awesome investment products are
- Investing in PPF account and earn a tax free return
- NSC (National Savings Scheme) for 5 year and 10 year
- 5 year FD with post-office or Bank
- Tuition fee paid for kids education (You can even show your kids kindergarten fees)
- Equity Linked Savings Scheme (ELSS)
- Unit linked Insurance Plans (ULIP) – One must avoid it
So you have couple of options here to utilize section 80C. If you have a kid who is going to school then you should submit his/her education fee receipts. Don’t go for a ULIP this year. ULIPs will eat your long term return value, although they save income tax. Instead buy a pure term insurance plan for life cover and invest rest amount any other savings schemes mentioned above to save more income tax.
2) Do you subscribe for Sodexho or Meal coupons?
This option might be applicable for only IT or software employees. But I found many people not subscribing for them saying it may increase their cost of living. I don’t agree that 100%. Sodexho coupons are widely used in many places in every city these days. The best part is you can spend them while eating at office, restaurants. And the amount is 2500 / month only which one can easily consume. If you are in a higher tax bracket you should go for Sodexho from this month and save that extra income tax amount.
3) Best time to buy your dream home and save more income tax
After increase in limit of interest paid on housing loan from 1.5 lakh to 2 lakh under section 24 it is expected that people will be able to buy their dream home more easily. If you have a plan to buy your first home or flat then I think this is the best time when everywhere property market is under control, RBI has reduce the REPO rate and you can take a higher interest burden.
4) Take care of your family health and save more income tax
Under section 80D one can buy and claim health insurance policy premium paid till Rs. 15,000/- for self + spouse + children. In additional Rs. 15,000/- premium paid for health insurance of parents and Rs 20,000 if parents are senior citizens. So max 35,000 you can claim under section 80D to save income tax. Health insurance is a must to do for everyone without wasting time. I know the importance of health insurance policy as in last few years my parents undergone some critical operations which cost like anything. On such medical emergency the tough thing is arrange and manage cash. If you have a good health cover you can easily forget about such hassle.
5) Few miscellaneous income tax saving tips
If you have already followed the above mentioned points then also check out few more ways to save more tax
- Don’t forget that by increasing the exemption limit from 2 lakh to 2.5 lakh one can easily save tax on 50,000 by default. Don’t forget that amount and it’s better to save this amount instead of spending. If you are in 30% bracket then by default you save 15,000.
- If you’re earning is more than its better to save more in PPF account. The limit is extended to 1.5 lakh from 1 lakh. With this you can completely consume section 80C. Don’t have a PPF account yet? Then you should open a PPF account asap.
- If you want to invest more beyond section 80C then invest in Rajiv Gandhi Equity Saving Scheme u/s 80CCG. In this one can save 50% income tax from the amount invested.
- Under section 80G one can get income tax benefit for donation to specified funds or charitable institutions.
- Don’t forget to claim your LTA (Leave Travel Allowance) to save more income tax.
- Last point is about the medical allowance of max 15,000. Claim all your family medical bills up to Rs 15,000 and save income tax.
Seems like lot of points you have to consider while planning for a proper income tax saving structure. But you have to do it as you will be the beneficiary at the end only. Although they are all conventional ways to save more tax but I think it’s better to structure them and share them in a proper manner. I hope these 5 Income tax saving tips will help you to save more money this year.
Don’t Miss Didn’t buy a term insurance plan yet?
Do you plan for your Income tax? Are you only buying LIC policies or any other insurance policies in the name of income tax saving? Share your ways to save more income tax here….Thanks for reading.