How to Save Income Tax in India Without Investment
For every taxpayer, the beginning of the financial year is a critical period, as this is the time to file taxes. Even though you haven’t made any investment for the year, you can still save tax on the expenses incurred by you.
In India, the taxation process begins with Income Tax Declaration and ends with filing of returns. Each year, you are to provide details about your gross income, expenditures along with evidence of investments in tax saving schemes like life insurance, Public Provident Fund (PPF), annuity plans, leave travel allowance, house rent allowance, interest paid on loans, etc.
As an employee, it is important to disclose the details of your investments to your employer, to enable them to make appropriate TDS deductions from the salary as per the appropriate income tax slab.
However, even if you haven’t made any tax-saving investments, you are still eligible to save taxes. Here’s how:
- Children’s Tuition Fees: If you’re paying for your kid’s tuition for university, college, school or any other full-time education programme, you can opt for tax deduction. As a parent, you are eligible to claim deductions for two children. If you have taken an Education Loan, it is possible to claim deduction on the interest payments under Section 80E of the IT Act
- Leave Travel Allowance: If you are travelling frequently or going on a vacation, you can get Leave Travel Allowance or LTA, which is applicable under Section 10(5) of the IT Act. To claim the deductions, you need to submit proof of travel to your employer before Mar 31, 2021 to be eligible for the claim deduction in FY2021
- Interest Paid on Loan: To fund your child’s education, you may apply for a loan, or you may borrow credit to accomplish goals like owning a home or car. In such cases, you are eligible for an exemption on interest payments. For instance, if you have taken a Home Loan sanctioned during the period Apr 01, 2019 to Mar 31, 2020 and the value of the house does not exceed Rs 50 lakh, then you can claim deduction up to Rs 10,000 in FY2020 under Section 80EE of IT Act. Another Section 80EEA allows deduction up to Rs 1.5 lakh on the interest paid for the acquisition of a house, where the value does not exceed Rs 45 lakh. Most commonly, people seek deductions on the principal amount of the home loan, which is allowed under Section 80C
- House Rent Allowance: If you are living in a rented property, you can save tax. Most often, our income consists of the House Rent Allowance or HRA component under which you are allowed to claim an exemption for rent under Section 10(13A) of the IT Act. Taxpayers who are unable to avail house rent allowance are eligible for rent claim deduction as per the provision under Section 80GG of the Act.
- Mediclaim: If you are paying premiums for a medical or health insurance policy, it is counted as an investment. For instance, if you have family health insurance that covers your spouse and children, then it is possible to get a tax rebate of up to Rs 25,000 in a year under Section 80D of the IT Act.
These may not be actual investment vehicles, but you can still save taxes to some extent. Apart from the points mentioned above, you can also seek tax exemption for any donations made towards social causes (only organisations approved under Section 80G). Tax Saving Options should be made a priority as it helps to reduce tax liability, plus these investments also help to secure your future.
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