You face a lot of complications during this initial period when you become eligible to pay tax. Even the idea of giving a small portion of your hard earned money Income tax looks scary. However, taxes are vital for the development of the nation and cannot be avoided. People are always on the lookout for more and more tax saving options. No one likes to miss out on options that can save the money they paid in the form of tax. Different people prefer different ways of doing this.
Here are some simple steps to save tax effectively:
Section 80C. use
In order to encourage the citizens of the country to adopt the habit of saving more tax, the central government authorizes certain deductions on the amount invested in certain instruments. Section 80C, Some popular tax-saving schemes are:
pension scheme
PPF Accounts
Equity Mutual Fund
5 Year Tax Saving Deposit
Life insurance policies or term plans
Most companies allow restructuring of certain salary components to reduce your tax liability. “If you have a good relationship with the Human Resources (HR) department, talk to them about adding some allowances to your salary. You can add allowances such as medical allowance, transport allowance, education allowance and telephone expenses as part of your salary. as they are not taxable. Additionally, go for meal coupons instead of lunch allowance, as they are exempt from tax 60,000 per annum.” said Gaurav Kapur, Director and Co-Founder, Fincorpit Consulting Pvt Ltd.
Employees generally get House Rent Allowance (HRA) in their income. If you do not have this component included in your salary.” If you live in a rented house and receive rent allowance from the employer, you, as an employee, can claim exemption on HRA as per the Income Tax Act It is,” said Amit Gupta, MD, SAG Infotech.
Also, charitable contribution under section 80G is deductible up to 10% of your income. However, you should ensure that you get a receipt from the organization and a copy of their income tax exemption certificate rather than donating without an acknowledgment, Gupta said.
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