Tax planning via buying health insurance plans for family is one method for lowering your tax outgo while increasing your income. The Income Tax Act allows for deductions for various investments, savings, and expenditures made by the taxpayer during a fiscal year.
Employees who are paid a salary make up the most significant portion of all taxpayers in the country. The amount of money they contribute to the overall amount collected through taxes is relatively substantial. The salaried category has various alternatives to reduce taxable income through tax deductions. One can drastically lower the amount of tax due to deductions, exemptions, and other tax breaks.
We’ll review some ways you can save money on taxes.
Ways to save taxes under sections 80C, 80D, and 80EE –
- Make a Rs 1.5 lakh investment under Sec 80C to reduce your taxable income.
- Under Section 80D, the maximum deduction is Rs. 25,000 for individuals under 60 years of age and up to Rs 50,000 for those over 60 years.
- Section 80EE allows you to deduct up to Rs 50,000 in home loan interest repayment.
Section 80C investment options –
The most popular tax-saving options available to individuals and HUFs in India are those covered by Section 80C of the Income Tax Act. Section 80C covers a variety of investments and expenses that can be used to deduct up to Rs. 1.5 lakh per fiscal year.
Other tax saving options besides section 80C
Aside from the 80C deductions, several Section 80 deductions are available to help you save money on taxes. Tax breaks on health insurance plan and home loan interest are just two examples.
- A medical insurance premium of Rs. 50,000 is to be claimed. (Rs 25000 for self, spouse, and children; Rs 25000 for dependent parents under the age of 60) under section 80D of income tax act.
- Interest paid on a home loan is deductible under section 24 up to Rs 2 lakh. Section 80EE also allows you to deduct up to Rs 50,000 in home loan interest over and above the limit set by section 24.
- A home loan can also help you reduce your taxable income because the principal portion of the loan is deductible under Section 80C up to Rs 1.5 lakh and the interest portion is deductible from income from house property.
- Section 80G allows the deduction of any charitable contributions made to notified institutions or funds.
- Section 80E allows a deduction for education loan interest.
How to plan your tax-advantaged investing for the year?
Plan your tax savings for the year using the following guidelines:
- Examine your existing tax-saving expenses, such as health insurance plans, children’s tuition fees, EPF contributions, home loan repayment, etc.
- Subtract this amount from Rs 1.5 lakh to determine how much to invest. You only need to support part of the amount if your expenses exceed the limit.
- Choose tax-saving investments based on your objectives and risk tolerance. Popular buys include ELSS funds, PPF, NPS, and fixed deposits.
This way, you can determine how to reach the 80C limit. It is ideal to start investing in the first quarter of the fiscal year so that your investments can be spread out over the year. This will save you money at the end of the year and allow you to make more informed investment decisions.
Tax benefits are subject to change in tax laws.
‘Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.‘
*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C apply