A family for most consists of people that are precious to them and will lead them to do anything for their happiness and security. But did you know that they can also help you save taxes as well? Yes, you read it right! You may despise taxes due to the heavy charges but you can easily avoid it. Here are some wise ways of saving on taxes.
Methods of Saving on Taxes
There are several tax-savings options available that you can invest in to reduce your taxable income. Below-given are some methods in which your family can help you save taxes for the current year:
In today’s day and age, having health insurance which covers your family during untimely medical requirements is a must. With the cost of medication being on the high, you need insurance to secure your finances and avoid a hefty bill. But with the benefits of health insurance, also comes the advantage of tax provisions under Section 80D. You can claim a tax deduction of up to INR 25,000 for the insurance bought for you, your spouse and children. And additional INR 50,000 can be claimed for health plan bought for your parents who are above the age of 60. But if your parents are below the age of 60, INR 25,000 can be claimed per financial.
If you are living on rent with your family, it makes you eligible for House Rent Allowance (HRA) deduction in your Income Tax Returns (ITR). But if your parents own the place, don’t worry, because you can still claim HRA by paying the rent to your parents. Under Section 10(13A) and under Section 80GG, you can claim the yearly rent even if your employer doesn’t pay you HRA or if you are self-employed. This enables you to save on taxes levied on rent by claiming HRA.
Life insurance policies are a necessity that every family needs to have in case something happens to you or your loved ones. An insurance plan not only safeguards you but also fulfils a long-term savings goal. The numerous options in policies allow you to customize your requirements with options like a money-back plan, whole life policy, endowment plan, etc. Along with a life cover, it gives you a maturity benefit at the end of the policy term. Under Section 80C, the premiums paid towards the term life insurance can be claimed by you. Also, your beneficiary can avail the death benefit as tax-free under Section 10(10D).
You can save up money for the future of your family by investing in financial tools like Public Provident Fund (PPF), Equity-Linked Savings Scheme (ELSS), National Pension System (NPS), etc. These instruments promote long-term savings with lucrative returns for the future. Contributions made towards such investment options can be claimed for income tax deduction under Section 80C. The income tax department has set a maximum limit of INR 1,50,000 per financial year.
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