Every March 31st is a gentle reminder to all the taxpayers in India. This year too, the taxpayers are gearing up with their Income Tax returns. Some of them are definitely looking at avenues to save tax. In this regard, many people have a misconception or prejudice that to save tax; one has to make more monetary investments. This is absolutely wrong and there are some alternative ways to save taxes even a week before the March 31st deadline.
Home loan is certainly the most common component which makes you eligible for tax deduction under existing rules of the I-T Act. Both the components of home loan EMI including principal and interest are eligible for deduction under Section 80C and can certainly ensure a breather in tax calculation. The overall limit of deduction is Rs 1.5 lakh. But individuals should be aware of the fact that in case of availing the tax benefits, the concerned property must not be sold within five years from the date of possession. Limit of deduction is Rs 2 lakh under section 24 against deduction of interest paid on a home loan.
Medical insurance is also one such arena where one can save Rs 1.5 lakh through the payment of premium on the health insurance of the concerned person or his family or parents. In case one of the family members is below 60 years, maximum deduction of Rs 25,000 per annum is required. In case of a senior citizen in the family, the deduction is further raised to Rs 30,000 per annum. Thus, medical insurance schemes indeed help in saving taxes to a considerable extent.
Individual taxpayers can also look at deduction under section 80E against an education loan. Unlike a home loan, where the deduction is applicable only on the repayment of the interest and not on the principal amount of the loan. Thankfully, there is no upper ceiling for claiming deduction under this section. The time limit for deduction is 8 years starting from the year and it can be of the person concerned or someone from the family.
In case a person who is in service and doesn’t get an HRA (house rent allowance) and lives in a rented house, can definitely claim deduction under section 80GG. Anyhow, the maximum amount of deduction under this section cannot exceed Rs 60,000.
Charity work, which is on one side under scrutiny, can also help save taxes. Any donations associated with a philanthropic activity is under section 80G of the I-T Act. But there are various classifications of donations. And the whole issue functions as a cluster where net deduction will depend on the class it belongs. Overall, it can be said that above-mentioned avenues can definitely help an individual in saving taxes, especially in the last week when the countdown has already begun.