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What’s the deepest fear in the world? – Glossophobia (fear of public speaking), correct? People are afraid of public speaking most, followed by extreme heights


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Hardik Lashkari

3 years ago | 5 min read

What’s the deepest fear in the world? – Glossophobia (fear of public speaking), correct?

People are afraid of public speaking most, followed by extreme heights, bugs & incests and drowning.

However, in India, Glossophobia finds itself slipping down to the second place, as people are more frightened of something else – tension of paying taxes.

Whether you are an entrepreneur, freelancer or a salaried employee, you must have devoted countless efforts in using Google to find ways to save hard-earned money from going into Government treasury.

Result?

You might be getting trapped by numerous companies trying to sell their products in the name of tax-saving instruments.

“Hardik, I don’t want to invest in mutual funds and lose lacs of rupees to save thousands of taxes.”

I realize your pain, here.

Just to save some bucks from going into Government account, people spend huge money into irrelevant mutual funds or irrational life insurance policies, without even knowing whether those can actually save the taxes.

But what if I tell you can save taxes even without making any irrelevant expenditures?

The glow in your eyes described everything, without waiting for you to say something – you are eager to listen to me and read every written word till the end of this article because tax saving is a headache for all of us.

Don’t worry, keep reading, for what is to follow are some hacks and tips which will help you save taxes out of your monthly payments and crucial investments.

PAYING SCHOOL/ COLLEGE FEES FOR CHILDREN? – GET THE BENEFIT UNDER SECTION 80C

You might be paying your children’s ever-increasing school, college or any other educational institution’s fees. However, the expenses might seem less burdensome since you can claim the fees as a deduction to reduce your tax outgo.

Section of Deduction – 80C

Amount of benefit – Actual fees paid (covered in the overall limit of ₹ 1,50,000 admissible under Section 80C). However, it shouldn’t be development fees, donation or payment of similar nature.

Conditions for claiming the deduction

  1. You can claim a deduction for any two children;
  2. Fees should be paid for their full-time education;
  3. You should be paying fees to any university, school other educational institute situated in India.

Do Visit: http://www.licindia.in

OPTING FOR LICS AND TERM INSURANCE? – GET DUAL BENEFITS BY SAVING YOUR LIFE AS WELL AS TAXES

In today’s fast-paced world, you can’t guarantee anything, not even life. Hence, by opting for Life Insurance policy or term insurance, you can give a sense of security to your family, in the event of unplanned circumstances.

Also, as you pay LIC or term insurance premium, you can reduce your tax expenses. However, saving taxes shouldn’t be the sole objective of buying a policy.

Section of Deduction – 80C

Amount of benefit – Actual premium paid (covered in the overall limit of ₹ 1,50,000 admissible under Section 80C).

Conditions for availing deduction

  1. You can claim a deduction on premium paid for yourself, spouse and children.
  2. The premium amount should be 10% or less of the sum assured if the policy is issued on or after April 1, 2012.

REPAYING HOME LOAN? REDUCE THE PRINCIPAL AMOUNT UNDER SECTION 80C

All of us dream of our own houses. Many of us fulfill it as well, by acquiring a home loan and paying in installments. Do you know you can claim both interests as well as the principal amount as a deduction to save your taxes?

Yes, while you can claim interest amount under Section 24 (by reporting interest income under “Income from House Property” head), the principal amount can be claimed under section 80C.

Section of Deduction – 80C

Amount of benefit – Actual principal amount repaid during the year (included in overall limit of ₹ 1,50,000 admissible under Section 80C)

SAFEGUARDING YOUR HEALTH CAN RESULT IN SAVING TAXES, HOW? – GET A MEDICAL POLICY UNDER SECTION 80D

Health problems, diseases, and accidents don’t give you time to plan; they occur unexpectedly. However, the magnitude of their impact can be reduced by opting for a medical insurance policy, which pays for the treatment as well as medicines.

You can also claim the medical insurance policy premium as a deduction to save your taxes.

Section of Deduction – 80D

Amount of benefit – A person can claim the deduction as per the following limits:

  1. Up to ₹ 25,000 for himself, spouse and dependent children (if the age of insured is 60 years or less);
  2. Up to ₹ 25,000 for parent or parents (if the age of insured is 60 years or less);
  3. Up to ₹ 50,000 for himself, spouse and dependent children (if the age of insured is more than 60 years of age);
  4. Up to ₹ 50,000 for parent or parents (if the age of insured is more than 60 years of age).

PAYING HOUSE RENT? CLAIM THE DEDUCTION UNDER SECTION 80GG

If you are an employee who doesn’t receive a house rent allowance from the employer, or a sole business owner or a freelancer, you might have a tough time paying a huge sum as house rent.

However, the Income Tax Department realizes your pain and has given you the benefit of claiming house rent as a tax deduction.

Section of deduction – 80GG

Amount of benefit – Lowest of the following amounts:

  1. Rs 5,000 per month
  2. 25% of the adjusted total income
  3. Actual rent minus 10% of adjusted total income

Adjusted total income – Income excluding long-term capital gains, short-term capital gains under section 111A, Income under Section 115A or 115D and before any deductions under section 80 (80C to 80U) are reduced.

Conditions for claiming the deduction

  1. You shouldn’t claim any HRA for the time period, for which you are claiming deduction under 80GG section;
  2. You, your spouse, minor child, or HUF of which you are a member shouldn’t own any residential accommodation, where you currently live and do your job or business.
  3. You shouldn’t be earning any income from a house property owned by you elsewhere.

Can you claim this deduction even when you live with your parents?

Yes, if your parents don’t have any income or their income falls in lower tax bracket than yours, you can pay rent to them, and then claim deduction under this section.

However, if your parents file ITR, they have to show the rent received from you as an income in the return.

PAYING BACK EDUCATION LOANS FOR HIGHER STUDIES? – CLAIM DEDUCTION UNDER SECTION 80E

If you have taken an education loan for higher studies for yourself, spouse or children, you can claim the interest amount as a deduction to reduce your tax outgo.

Section of deduction – 80E

Amount of deduction – Actual amount paid as interest.

Conditions for claiming the deduction

  1. You can claim interest for a maximum of 8 years.
  2. You can claim interest on a loan for higher studies taken for yourself, spouse or children or a for a student for whom you are a legal guardian.
EARNING INTEREST FROM SAVING BANK ACCOUNT? GET A DEDUCTION UNDER SECTION 80TTA

Keeping some money into a savings bank account for future purposes?

You must be earning interest on your quarterly balance from the bank. Interest on savings bank account has to be paid as an income from other sources while filing the income tax return.

However, you can nullify the effect of such interest income up to ₹ 10,000.

Section of Deduction – 80TTA

Amount of benefit – Actual interest amount or ₹ 10,000 whichever is less.

Bottomline

You can save a substantial amount of taxes, just by claiming the monthly expenses and occasional investments as a deduction.

Additionally, donations made to charitable institutions and temples can also save some taxes.

When you look around to invest money, saving taxes shouldn’t be the objective. Rather, you should jot down your own financial goals and plan the investments accordingly, even if those investments don’t save you taxes.

August 31, 2019, is the last date for filing income tax returns for FY 2018-19. Pick a leave out of this article and save your taxes while filing the return. Don’t forget to shoot any queries you have in the comment section below.

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Hardik Lashkari

I’m a financial copywriter and content writer, and a time-saving social media ghostwriter for busy founders and digital influencers. My favourite F-word is finance. Doesn’t it convey a lot about my personality?


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