Income Tax: Individual taxpayers earning up to Rs. 8 lakh are exempt from tax; learn 10 simple techniques to reduce taxes

Income Tax: Individual taxpayers earning up to Rs. 8 lakh are exempt from tax; learn 10 simple techniques to reduce taxes

Income Tax: Individual taxpayers earning up to Rs. 8 lakh are exempt from tax; learn 10 simple techniques to reduce taxes

Income Tax Savings: You may claim tax exemptions on investments, profits, and other sorts of payments to help save money on taxes for the fiscal year. The unique aspect is that anyone earning up to Rs 8 lakh may avoid paying all taxes.

There are now only a few months remaining in the 2023–2024 fiscal year to avoid income tax. These days, investment proof is submitted. In addition, there is another approach to reduce taxes by investing. However, there is still time if you haven't taken any action to reduce your taxes yet. For the fiscal year in which you are eligible to claim tax exemption on investments, profits, and other sorts of payments, there are a few tax deductions that you may take advantage of. The unique aspect is that anyone earning up to Rs 8 lakh may avoid paying all taxes. Let's examine how...

The top ten ways to reduce income taxes

1. Invest in pension plans, LIC, EPF, and PPF.

There are several tax exemptions available under Section 80C, making it the simplest and best alternative for reducing income taxes. The LIC insurance premium is yours to claim. Under Section 80C, the principle of your house loan, children's education expenses, Provident Fund (EPF), PPF, and National Savings Certificate (NSC) are all tax-exempt. The amount that is excluded is Rs 1.5 lakh. If you have bought an annuity plan (pension plan) from LIC or another insurance firm, you are eligible for tax exemption under Section 80CCC. If you have contributed money to the Central Government Pension Scheme, you may be eligible to receive it under Section 80 CCD (1). A person is only free from taxes up to Rs 1.5 lakh total.

2. Reduce taxes with a mortgage

Under Section 80C, you may get a tax exemption on the principal amount of your house loan; however, the maximum amount is Rs 1.5 lakh. Therefore, keep in mind that any additional deductions you have claimed under section 80C (all plans falling under the first point) are only allowed to total Rs 1.50 lakh.

3. Interest on a house loan will be tax-free.

In addition to the principle amount of a house loan, interest is also excluded from taxes. You may claim this exemption under Income Tax Section 24(B). Under this, interest up to Rs 2 lakh is free from taxation. This exemption from taxes will only be granted if the property is "self-occupied."

4. Put money into NPS

A further exemption of Rs 50,000 is granted under section 80CCD (1B) if you invest in the central government pension system, New Pension System (NPS). This exemption is not the same as the Rs 1.5 lakh tax relief that section 80C grants. Section 80CCD2 allows for the claim of an employer's contribution to the Central Government Pension Scheme. For this, there are two prerequisites. First, find out whether the employer is a State Government, Public Sector Unit (PSU), or another entity. Ten percent of the pay is the maximum deduction allowed in this case. The deduction limit is 14% in the event that the employer is the Central Government.

5. Premiums for Health Insurance

If you have taken out health insurance, you may claim the premium under Section 80D. You can claim up to Rs 25,000 in premiums if you have taken out health insurance policies for yourself, your spouse, your children, and your parents. In this instance, the parents' ages ought to be under sixty. The maximum amount of tax exemption that applies if your parents are senior citizens is Rs 50,000. This also includes a Rs 5,000 health exam. The deduction, however, is limited to the cost of health insurance.

6. Treatment costs for dependents with disabilities

Claims are allowed for costs related to the care or maintenance of dependents with disabilities. A maximum of Rs 75,000 may be claimed annually. For medical costs, a tax deduction of Rs 1.25 lakh may be claimed if the dependent person's handicap is 80% or more.

7. Exemption from taxes on expenses for medical care

Under Section 80DD 1B of Income Tax, a deduction of up to Rs 40,000 may be made for the treatment of a specified ailment suffered by the taxpayer or any dependant. The upper limit is Rs 1 lakh if the individual is a senior citizen.

8. Interest on student loans is free from taxes.

The tax deduction for interest paid on student loans is limitless. The year when the loan repayment begins is when the tax claim begins. The next seven years are covered by its benefits. For a total of eight years, you are eligible for tax exemption. For two children together, there is an education loan tax exemption. For two children, if two loans of Rs 25 lakh each are taken out at a 10% interest rate, interest of Rs 5 lakh would need to be paid yearly on a total of Rs 50 lakh. This full sum will be excluded from taxes.

9. loan reimbursement for electric cars

If you have taken out a loan to purchase an electric car, you are eligible for an income tax exemption of up to Rs 1.5 lakh for the interest paid on the loan under Section 80EEB.

10. Payment of Housing Rent

Yes, you may claim home rent under Section 80GG if HRA is not included in your income. However, if HRA is provided by your employer, you cannot claim house rent under Section 80GG.