According to the famous saying, saving a penny is earning a penny. You can save on taxes and increase your income with tax planning. Investments, savings, and expenditures incurred by a taxpayer in a particular financial year are all tax-deductible under the income tax act. We will discuss some of the ways that you can save on taxes.
Tax–deductible expenses In taxation, a deductible is an expense that a taxpayer or business can deduct from their adjusted gross income while completing a tax return. By reducing taxable income, the deductible expense reduces taxes owed.
Tax – deductible items We all know the more common tax deductible items, such as business travel, office costs, pensions and the like, but there are expenses that many of us regularly incur that you may not know are also tax – deductible. This includes:
Deduction for pre-nursery Claim relief on children’s playgroup, pre-nursery and nursery fees It is possible for any individual who has paid education fees for his or her children to claim this deduction under Section 80C. Parents can deduct the entire amount they have spent on the education of their children under Section 80C. However, the maximum amount of the deduction under Section 80C is Rs. 1,50,000.
Re-investPublicProvidentFund(PPF)tosavetax The Public Provident Fund (PPF) scheme is a long-term investment option that offers a competitive rate of interest and returns. Interest and returns earned are not taxed. One must open a PPF account under this plan and the amounts deposited during the year will be deductible under section 80C.
Stampdutyalsocutstax Section 80C of the Income Tax Act allows a deduction for stamp duty, registration charges, and other expenses directly connected with the transfer. The maximum amount of deduction under this section is Rs. 1,50,000.
Make a gift to parents The maximum tax exemption amount for seniors is *3 lakh, while super seniors over 80 years of age get a tax-free income of up to ₹5 lakh. Even if they have income above the basic exemption limit, they still would be paying a lower tax on the investments made in their name based on their tax slabs. Moreover, interest income earned on deposits made in banks or post offices is exempt from tax for senior citizens.
Rent to parents cuts tax When you are a salaried employee living with your parents in a house they own but that you do not own, you can pay them rent and claim the house rent allowance (HRA) exemption offered by your employer. They’ll benefit if their income is below the tax-exempt level or their tax bracket is lower than yours. Under Section 24, they can deduct 30% of the annual rent as a deduction for repairs and maintenance.
Taxbreakforgroupcover As a policyholder, you will be entitled to deduct up to Rs. 25,000 annually based on the premiums paid for your health insurance policy. Your spouse and dependent children will also be covered under the policy. If you or your spouse is 60 or older, you can get the maximum tax benefits on senior citizen health insurance plans up to Rs. 50,000. An additional Rs 5,000 covers health check-up expenses for your parents, your spouse, and your dependent children.
Parents’treatmenteligible Medical expenses incurred by seniors are deductible under the Income Tax Act (eligible parents) up to Rs. 50,000 (as of FY 2021-22). As a result, if you are 60 years old or older you may claim a tax deduction for medical expenses or health insurance premiums of up to Rs. 50,000.
At AJSH, we assist our clients in dealing with various income tax compliances, including income tax assessments, TDS returns, ITR filings, tax advisory and other related services, by providing them adequate support and guidance from our end. If you have any questions or wish to know more about lesser for tax breaks, kindly contact us.
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