Now only a few months are left to save income tax for the financial year 2023-24. These days investment proofs are being filed. Besides, there is also a way to save tax through investment.
But, if you have not done anything for tax savings yet, there is still time. To save tax for the financial year, there are some tax deductions in which you can claim tax exemption on investments, earnings and other types of payments. The special thing is that those with salary up to Rs 8 lakh can save the entire tax. Let us understand how…
10 best options for income tax savings
1. Investment in LIC, EPF, PPF and pension schemes
The easiest and best saving option for income tax savings is Section 80C. Many types of tax exemptions are available in this. You can claim the premium of LIC policy. You can get tax exemption under 80C on Provident Fund (EPF), PPF, children’s tuition fees, National Savings Certificate (NSC), home loan principal. The exemption limit is Rs 1.5 lakh. Under Section 80CCC, if you have purchased an annuity plan (pension plan) of LIC or any other insurance company, then you can avail tax exemption. Under Section 80 CCD (1), if you have invested money in the pension scheme of the Central Government, then you can claim it. The tax exemption taken together cannot exceed Rs 1.5 lakh.
2. Save tax with home loan
You can avail tax exemption on home loan principal under section 80C. However, it cannot exceed Rs 1.5 lakh. Therefore, if you have claimed any other deduction in 80C (all plans of the first point), then remember that all these can be up to Rs 1.50 lakh only.
3. Home loan interest will save tax
Apart from home loan principal, tax exemption is also available on interest. You can avail this exemption under Section 24 (b) of Income Tax. In this, interest up to Rs 2 lakh comes under the ambit of tax exemption. This tax exemption will be available only if the property is ‘self-occupied’.
4. Invest in NPS
If you invest in the Central Government’s pension scheme New Pension System (NPS), then you get an additional exemption of Rs 50,000 under Section 80CCD (1B). This exemption is different from the tax exemption of Rs 1.5 lakh available in section 80C. Employer’s contribution can also be claimed in the Central Government Pension Scheme under Section 80CCD2. There are two conditions for this. The first is whether the employer is a Public Sector Unit (PSU), state government or anyone else. The limit of deduction in this is 10% of the salary. If the employer is the Central Government then the deduction limit will be 14%.
5. Health insurance premium
If you have taken health insurance, you can claim premium under section 80D. If you have taken a health insurance policy for yourself, partner, children and parents, then you can claim a premium of up to Rs 25,000. In this case the age of the parents should be less than 60 years. If your parents are senior citizens, the tax exemption limit will be Rs 50,000. Health checkup of Rs 5000 is also available in it. However, the deduction cannot exceed the health insurance premium.
6. Expenses for treatment of disabled dependents
Expenses incurred on the treatment or maintenance of disabled dependents can be claimed. You can claim up to Rs 75,000 in a year. If the disability of the dependent person is 80% or more, then a tax deduction of Rs 1.25 lakh can be claimed on medical expenses.
7. Tax exemption on payment for medical treatment
Under Section 80DD 1B of Income Tax, deduction up to Rs 40,000 can be claimed for the treatment of specific illness of self or any dependent. If the person is a senior citizen then this limit is Rs 1 lakh.
8. Tax exemption on education loan interest
Unlimited benefit of tax deduction on interest on education loan is available. Tax claim starts from the same year in which loan repayment starts. Its benefits are available for the next 7 years. You can avail tax exemption for a total of 8 years. Tax exemption is available on education loan of two children together. If a loan of Rs 25 lakh each is taken at 10% interest rate for two children, then annual interest of Rs 5 lakh will have to be paid on a total of Rs 50 lakh. Tax exemption will be available on this entire amount.
9. Rebate on loan for electric vehicles
Under Section 80EEB of Income Tax, if you have taken a loan to buy an electric vehicle, then tax exemption up to Rs 1.5 lakh is available on its interest payment.
10. House Rent Payment
If HRA is not a part of your salary then you can claim house rent payment under section 80GG. Yes, if your company gives HRA then you cannot claim house rent under 80GG.
