Taxes are the compulsory charges levied on an individual’s income, business profits, transactions and the cost of goods and services as a way to contribute to the state revenue. This revenue is then used to run government operations and run the economy in a better way. Hence, taxes do us all this good and yet when it’s time to make your own contribution, you find yourself cursing this system. There must be something you are doing wrong because taxes should ideally not be cause for you to start sweating. Section 80 of the Income Tax Act has numerous sub-sections that deal with tax saving instruments and methods in specific jurisdictions. Therefore, the first step when it comes to saving on tax payments is to get sufficiently acquainted with these provisions. Then you may proceed to plan your investments wisely so as to avail the maximum tax benefit which is a 1.5 lakh rupees deduction from your total income.
Read up on Sections 80C, 80CCC and 80CCD of the Act which state all the ways you can avail tax deduction benefits for any investments you make, including life insurance such as Aegon’s iMax and retirement plans such as iGuarantee plan. Tax deductions can also be availed on medical expenditures toward yourself, a handicapped relative, and a dependent relative as under sections 80D, 80DD and 80DDB respectively. To know about housing and taxes, study Section 80GG which deals with tax deductions availed on house rent and section 80EE which deals with deduction from interest on loan taken for first home.
You are eligible to receive tax deductions, if you choose to make a contribution by means other than cash to a political party as an individual or a company. You may also indulge in philanthropy freely as deductions of 50-100% may be availed for donations made to support social causes as per section 80G of the Act.
If you are looking to pursue higher studies or want the same for your children or spouse, learn about the deductions available on the loan taken under section 80E. The law is partial when it comes to enhancing public knowledge. It also makes allowances for persons with disability under section 80U wherein a tax deduction between 50,000 to 1 lakh rupees may be availed by the individual, depending on the severity of the condition.
By now you must have realized, by arming yourself with relevant information and making informed decisions, you can make the process of paying taxes much less taxing!
How to save taxes as a salaried individual?