Save tax: What do we not do to save tax? After consulting CA and tax experts, they make investment strategies and invest their money in various schemes accordingly throughout the year. How good it would be if income tax is saved without investing anything. Archit Gupta, Founder, and CEO of Clear tell you about five such options, where you can save tax without any separate investment.
House Rent Allowance (HRA)
Employees living in a rented house and claiming HRA can claim tax exemption under the Income Tax Act. HRA is available up to 50% of the salary (basic pay and dearness allowance) for those living in metro cities and 40% of the salary for non-metro cities. If you live in the parent’s house, then you can also claim tax exemption in the form of HRA by showing the rent payment to them.
A tax deduction can be claimed for the interest paid on the education loan. You will get tax exemption on the entire amount paid as interest on the loan under Section 80E of Income Tax. You can take it continuously for 8 years. This loan can be taken for self, spouse, children, or any student of whom you are the legal guardian.
Home Loan Interest on home loan
for buying/constructing a house is also eligible for exemption under section 24 (b) of Income Tax. Rs 2 lakh is eligible for deduction if you are self-occupied in a residential property. You can also claim a deduction for the interest to be paid subject to certain stipulated conditions u/s 80EE and 80EEA. This is in addition to the deduction of Rs 2 lakh provided under section 24 of the Income Tax Act. In this way, you can save a total tax of Rs 3.5 lakh.
Medical Expenses for Senior Citizen
Section 80D allows tax exemption on health insurance premiums paid for self and family members. If you have paid a health insurance premium for self, spouse, or dependent children, you can deduct Rs 25,000. For parents above 60 years of age, there will be an additional discount of Rs 25,000 on the premium. If there is no insurance, then a tax exemption of up to Rs 50,000 can be claimed on hospital expenses also.
Tuition Fee for Education
If the employee receives any allowance, hostel expenses for the education of children by his employer, then tax exemption can be taken on the tuition fee paid under section 10 of Income Tax. This exemption is available for children’s education allowance of Rs 1,200 annually for average hostel expenses of Rs 3,600 per annum. If the allowance is not received by the employer, then the employee can claim tax exemption on a tuition fee of Rs 1.5 lakh annually under section 80C of Income Tax.