You and me, everyone want to save tax. Salaried or Non-Salaried, everyone love tax saving! Even, you must be knowing some ways of tax saving. But still, there is a scope. Rather, you can always find some extra methods to reduce the tax outgo. Do you want to know the 5 most effective ways to save tax? You must read this post to save thousands of rupees. This article is specially written for salaried people.
We get a job in a different city or place. We go there to do our job. If the company does not give us accommodation we have to rent out. We live in a rented house because of our job. Therefore, the expense of rent should be deducted from the taxable income.
Employers do give some part of your remuneration as House Rent Allowance(HRA)
You subtract this HRA from your gross income. However, you cannot take full benefit of HRA for tax saving. There is a formula for the HRA tax benefit.
You can deduct the lowest of these from gross income.
You can also use an HRA Calculator to find out the HRA tax benefit.
HRA gives you big tax saving. Ask your employer to keep the provision of HRA in your salary structure.
Some personal expenses are also eligible for exemptions. These Expenses are deducted from your gross salary. Your employer can give you leave travel allowance as well. You are entitled to tax-free LTA
Certain investments give you the tax rebate. These investments come under section 80C deductions. The amount invested is deducted from your taxable income.
Many of such investments come under EEE category. It means you need not to give tax at the time of investment, earning and redemption. However, There is a maximum limit for 80C deductions. It has become 1.5 lakhs after the budget of 2014.
Medical Insurance expense gives you the deduction, over and above the 1.5 lakh limit. You can save tax through the health insurance premium of your family and dependent parents. Also, health checkup can also give you tax saving. You can deduce these expenses from your total taxable income.
Home loan interest payment enjoys separate tax saving. The limit of deduction for home loan interest payment is ₹2.0 lacs. This deduction can give you a very big tax saving. However, the loan amount should be big to get the full benefit. You can also double your tax saving through joint home loan.