Minimizing Tax Deductions: A Guide to Legal Tax Savings

Wealth is the key to a secure future. We all know that the penny saved is a penny earned. Those who are employed have faced the problem of paying a huge sum as taxes. This tax saving is one of the important parts of wealth maximization.

Remember tax saving must be done according to the deductions provided in the Income Tax Act and not with some unfair means. We are Pension Box and will discuss some of the very beneficial methods of tax saving. Legal tax-saving methods

People are tempted to invest in various products that improve our quality of life. However, sometimes investing in such products causes you financial distress. To alleviate this burden from your shoulders, the government offers various tax deductions on income.

How to get tax benefits via loans?

Invest in government schemes

To encourage the public to invest, the government provides many such schemes that offer high returns as well as tax deductions. Section 80 C allows individuals to claim up to 1.5 lakhs spent on such investments as tax waivers on total annual income.

You can avail tax exemption by investing in the following schemes.

1. Senior Citizen Savings Scheme (SCSS)
2. Sukanya Samridhi yojna ( SSY)
3. National Pension Scheme ( NPS)
4. Public Provident Fund (PPF)
5. Investment option under Section 80 C

The best tax-saving options available for you in HUL in India. These are under section 80 C of the Income Tax Act. You can claim deductions up to the limit of Rs 1.5 lakh in a financial year.

How can I save tax apart from 80 C?

Individuals can also save tax under Section 80 apart from Section 80 C. Tax benefits on health insurance and medical premiums are as follows -

Individuals can save tax on their earned income if they have a home loan. They can save up to 1.5 lakh and the Interest portion can be claimed as a deduction from the income from house property.

If you have done any charity to NGOs you can claim deductions under section 80 G Interest paid on education loans is exempt from tax under section 80 G.

Buy a home loan

The government has various plans that help you to buy a home easily. Some of these are PMAY ( Pradhan Mantri Awas Yojna) and DDA ( Delhi Development Authority). These plans have made housing accessible in India. These plans are launched under the income tax section 80 C and 24(b) and these sections help to minimize monetary liability and lower the tax burdens.

The amount of income spent on the repayment of the principal borrowed amount is eligible for section 80 C and hence provides a deduction up to 1.5 lakhs.

Moreover, tax exemption is provided up to 2 lakhs in the interest portion of the house loan according to 24 b.

Also if the individuals rent out the newly purchased home then the whole interest portion is exempt from annual income tax computation.

If the individual has taken the loan for building a house he can also avail the benefit of section 24(b) provided that the construction process is completed within five years.

According to Section 80, EEA individuals can claim additional benefits if they are the first individual homeowner.

Buy a health Plan

According to Section 80 D, a portion of their annual taxable income is spent on Premium payments. Based on age different sums are exempted from tax. Purchase Life insurance plans

There are tax exemption benefits for insurance premiums according to section 80C.

In case of maturity or early death according to section 10 D tax exemption is provided on the sum received. In case the death is before maturity the sum is provided on death.

If an individual buys insurance after April 2012, he can avail benefits of up to Rs 1.5 Lakh paid on annual premiums. These benefits can be claimed under Section 80 C provided it is less than 10% of the entire sum assured.

Also, the acquisition or renewable of life insurance coverage as well as annuity payments on such plans made through a monthly salary is eligible for tax exemption of up to Rs 1.5 lakh according to Section 80 CCC.

Also according to 23AAB, only certain pension funds are eligible for exemptions of up to 1.5 lakh under section 80 CCD.

How to plan your tax-saving investments?

A wise individual will always plan their investments at the beginning of the year.

People often tend to procrastinate on tax planning till the last quarter of the financial year. This results in hurried decisions. However, if you plan at the start of the year. Planning at the start of the investment helps you achieve long-term goals.

Please note that tax saving should be one of your additional benefits and not the goal.

• Follow the steps to save the tax in the coming year.
• Ensure you hold an insurance policy. Try to pay its premium on time.
• Reduce this amount from 1.5 lakh to get an idea of how much to invest.
• Select a tax-saving investment according to your goals. NPS, PF, etc. can be used as fixed deposits.

Now you can use 80c to figure it out. This investment in the first quarter of the financial year is wisest.

Thus individuals can plan to save their taxes and maximize their wealth. By using the allowances given in the Income Tax Act one can easily save a huge amount of income. However, you need to plan your investments with an expert's advice. We at PensionBox help you plan your investments efficiently.