TRICKS TO PAY LESS TAXES
The less income we have, the lower taxes will be. But we don’t necessarily have to make less money to pay less tax. Taxes are difficult to avoid, but there are many strategies to help ward them off. Some ways to protect our income from taxes.
1. Housing Loans
The housing loan includes both principal repayment and interest payment. Tax deductions can be availed under both the categories under Section 80C and Section 24(b) of the Income Tax Act.
Housing loan is eligible for tax benefits as under-
| Section | Nature of Tax Deduction | Maximum Deduction (INR) |
|---|---|---|
| Section 80C | Tax Deduction on Principal Repayment | Up to Rs.1,50,000 |
| Section 24B | Tax Deduction on Interest Paid | Up to Rs.2,00,000 |
| Section 26 read with Section 24 | Tax Deduction on Home Loan for Joint Owners | Up to Rs.2,00,000 respectively for each of the joint borrowers who are co-borrowers |
2. Presumptive Tax Scheme for Professionals
It was introduced to help self-employed professionals to get the benefit of a taxation scheme that was simpler and reduced the burden
A resident person can get the advantage of presumptive taxation scheme:
1) Legal
2) Medical
3) Engineering or architectural
4) Accountancy
5) Technical consultancy
6) Interior decoration
7) Any other profession as notified by CBDT
Any person adopting for Presumptive tax scheme, income will be computed on the basis, @ 50% of the total gross receipts of the profession. However such person can declare income higher than 50%.
3. Medical Insurance
As per Section 80D of the Income Tax Act, the premium paid for a health insurance policy is deductible from the taxable income.
| Particulars | Medical insurance premium paid for | Deduction under 80D | |
|---|---|---|---|
| Individual | Parents (dependent or not) | ||
| Individual and parents below 60years | 25,000 | 25,000 | 50,000 |
| Individual below 60years and parents above 60years | 25,000 | 50,000 | 75,000 |
| Individual and parents are above 60years | 50,000 | 50,000 | 1,00,000 |
4. Pension scheme
| Nature | Maximum deduction | Note |
|---|---|---|
| Deduction for employer contribution | 10% of salary (no monetary limit) | Outside of 80C and 80CCD(1B) limits |
| Deduction for employee’s contribution | 10% of salary, max up to Rs.1,50,000 | Within Section 80C |
| Self-contribution to NPS | Rs.50,000 | In addition to 80C and 80CCD (2) |
5. Education Loan
Tax deductions on tuition fees expenses of school and college going children in India can be claimed by individual employed in India.
The maximum limit of tax deduction allowed is Rs. 1.5 lakh. If the taxpayer has high tuition fee needed or a top priority for the same as compared to other schemes eligible for income tax deductions , then he can claim entire 1.5 lakh income tax deduction for tuition fees alone.
6. Tax Benefits on CAR
In a case where the car is owned by the employee and running, and maintenance expenses are met or reimbursed by the employer
| Particulars | Cubic Capacity within 1.6 litre | Capacity exceeding 1.6 litre |
|---|---|---|
| Expenses Reimbursed by the employer | Rs.1,800 + Rs.900 p.m. | Rs.2,400 + Rs.900 p.m. |
| Expenses met by the employee | Rs.600 + Rs.900 p.m. | Rs.900 + Rs.900 p.m. |
- Car leasing is the process in which an Employees use a car for a period in exchange for timely payment of rentals.
- Leasing a car could help you save as much as 30% on your taxes.
- You can lease a car for Rs. 9,100 per month for 48 months. If you want to lease it for 12 months, the minimum monthly payment will be about Rs. 10,600.
The lease amount you pay for a vehicle is eligible for tax relief. Leasing a vehicle could help you save as much as 30% on your taxes. This is applicable for self-employed as well as salaried professionals.
You can lease a car for as little as Rs. 9,100 per month for 48 months. If you want to lease it for 12 months the minimum monthly payment will be about Rs. 10,600.
Disclaimer:
“The information contained herein is only for informational purpose and should not be considered for any particular instance or individual or entity. We have obtained information from publicly available sources, there can be no guarantee that such information is accurate as of the date it is received, or it will continue to be accurate in future. No one should act on such information without obtaining professional advice after thorough examination of situation.”
Prepared On:
10/08/22
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