When the tax filing dates get closer, most people find themselves in a difficult position. Luckily, there are now many ways in which salaried professionals can reduce and save more on their income taxes. However, while the choices make it easier for taxpayers to choose an investment opportunity as per their preferences, for many individuals, the diversity also makes it complicated.
If you are looking for tips and the ability to enhance your tax preparation skills on how to save personal tax, here are a few ideas that can help.
1. Allow an interest in insurance
One of the easiest ways to save tax is for you and your family members to purchase health and life insurance. Under Section 80D, 80DD, and 80DDB of the IT Act, the premium charged for insurance is liable for tax deductions.
In each segment, the amount of deduction varies, allowing you to choose insurance plans based on your insurance and personal income tax savings limit.
2. A home loan for tax savings
Taking loans like home loans is another common and highly profitable tax saving choice for a salaried professional. You can demand deductions on the principal amount you repay to your lender under Section 80C when you take out a home loan.
Furthermore, even the interest charged to the lender is liable under Section 24 for deductions. The combined home loan deduction will, in most cases, be up to Rs. 2 lakhs in a financial year. When you take a loan for home building or reconstruction, the deduction is also accessible.
3. Seeking a loan for education
Under Section 80E, you can assert a tax deduction if you take out an education loan for yourself, your spouse, children, or a student for whom you are a legal guardian.
Saving taxes with an education loan is one of the most advantageous personal income tax saving choices since there is no upper restriction on the deduction. The deduction can, however, be claimed only for interest and not for the principal sum.
4. HRA tax deduction
If you live in rented accommodation, the allowance provided by your employer is HRA or House Rent Allowance. For the assessment of your taxable income, this HRA can be excluded from the total salary.
There are different guidelines for seeking this exemption in income tax laws. You may claim a full or partial HRA exemption based on these regulations. If you do not have an HRA factor in your income, speak to your employer about the same as it can help you save a considerable amount of money in personal income tax.
To reduce your tax liability, there are many personal income tax saving strategies and options that you may consider. However, a taxpayer needs to escape the last-minute tax filing hurry to make the correct pick. When you’re running out of time, you might end up choosing an option that may not be the best choice for you.
So, when a new financial year starts, start your tax planning and follow your personal income tax guide. Try to know as much as possible about all the current alternatives to make appropriate tax planning decisions.