The Government of India has enormous amounts of methods to charge tax from you. Whether on daily expenses, your total income, when buying & selling of property, etc, you are taxed on every penny that goes or comes. However, you will have to learn that you are eligible to save tax legally in eight different ways. Whether you are a salaried individual or self-employed you can invest, borrow, donate or make expenses to save tax legally. But how will you do it? Let’s see.
Here Are the 8 Most Safest Ways in Which You Can Save Tax Legally:
1. By Investing Your Taxable Income in Government Products
You can claim a tax rebate with an issue after investing your taxable income in various Government investment tools. As per the Indian Taxation Rules, Under Section 80C deductions of the Income Tax Act (ITA), an individual can claim deductions up to ₹1.5 lacks.
Here’s the list of Government-backed investment tools which help you save tax:
- Employee Provident Fund (EPF),
- Public Provident Fund (PPF),
- Equity Linked Saving Scheme (ELSS),
- Sukanya Samriddhi Account,
- Tax Saving Fixed Deposit,
- National Saving Certificate (NSC), and
- Senior Citizen Saving Scheme
2. Make Charity Donations
Making donations to charitable trusts can help you get some taxation relief in India. The government has allowed this method of saving tax to encourage wealthy people to help the poor and needy. So, one can get 100% tax deductions under Section 80G of the ITA if he makes donations to the PM Relief Fund, verified NGOs, or political parties.
3. Get a Home Loan
Repayments of home loans can help you to save on taxes. For the ongoing home loan repayments you can claim deductions on the principal amount repayments Under Section 80C up to ₹2 Lakh.
4. Education Loan Will Help You Save Tax
Against the repayments of an Education loan, an individual can get a complete exemption. There is no limit set for deductible amounts but unlike home loans, exemption on education loan repayment is not available on the principal amount.
5. Show Personal Expense
Here are some personal expenses that help you save tax:
- You can show tuition fees for yourself or your children.
- Show insurance premium for self or spouse or children.
- Ongoing health treatment
- Medical treatment for any handicapped member.
6. Long Term Capital Gains Will Help
Selling a long-term asset possessed by you will help you to get an exemption from the Capital Gain Tax if you reinvest your profit amount in select investment tools.
7. Go for Salary restructuring.
Expenses made concerning your job are tax deductible. Here are the few types which can help you to save tax:
- Conveyance
- House Rent Allowance
- Driver
- Uniform
- Office Entertainment
- Medical Treatment
- Telephone
- Personality Development
8. Get a Leave Travel Allowance
Leave travel allowance when approved by the employer helps you to claim a tax deduction for the same. This type of claim can only be made twice in four years. Your travel plan must be within Indian borders.
