Best Ways to Save Big Amount of Income Tax in India (2024)

Updated on January 5, 2023Posted byCA Preeti Punihani (Ex-employee)Posted inLatest Income Tax News & Articles, Taxes in India 8 Minutes Read

Tax payment to the government by any single person or any corporation is known as direct taxes, and tax paid for the use of goods and services is known as indirect taxes. The main aim to collect taxes is to make out the expenditure of the government for the betterment of a nation.

The Section Deals with Saving of Income Tax:-

• * S 80C was introduced in the year 2005 by the Finance Act and provides a sum of deduction from total income which includes expenditure, payment and investment.
  • S. 80C can be opted by Individual and Hindu Undivided Family where the assessee purchased the insurance before 1st April 2012 and if the premium is less than 10% of the sum assured.
  • Contribution of an employee towards Employee’s Provident Fund Scheme.
  • Contribution by an employee to a Recognized Provident Fund.
  • Tuition fees are paid related to any educational institution situated in India for two children.
  • Payments of instalments or part payments of loans taken for buying or constructing the residential property. If the property is transferred before the expiry of 5 years from the end of the financial year in which possession of such property is obtained by him, the aggregate amount of the deduction of income will be allowed for various years and shall be liable to tax in that year
  • Contribution to Sukanya Samridhi account.
• * S.80 CCC related to a deduction for premiums paid for the saving Plan of LIC or other Insurer but it will avail up to Rs. 1,50,000/-
• * S.80 CCD related to the deduction in respect of contribution to Pension Account it can be extended up to 10% of salary
• * S.80 CCD(1B) (NPS) Contribution in Nation pension Scheme, an additional benefit of Rs.50000/-
• * S.80 TTA related to the deduction on savings book account will be available to an individual or HUF, which will be up to Rs 10,000/- in respect of interest
• * S.80 GG related to the deduction on the house rent deduction will be at least up to rent paid minus 10% of total income. Rs. 5000/ pm and 25% of total income paid
• * S.80 E related to higher studies deduction on the loan
• * “S.80 CCG related to the deduction in Gandhi Equity Saving Scheme launched in the year 2012 Budget, for those whose income is less than Rs.10 Lakhs and can available a deduction up to 50%”
• * S.80 D Deductions on Medical Insurance deduction is available up to Rs. 50,000/- for senior citizens and up to Rs. 25,000/ in other cases for insurance for self, spouse and dependent children
• * S.80 DDB Deductions on Medical Expenditure for Self or Dependent Relative the deduction may extend up to Rs. 40,000/- or the amount actually paid, whichever is less is available for expenditure during the medical treatment if HUF or individual below the 60 years of age and if assessee’s age 60 years or above but less than 80 years, in that case, Rs.1,00,000/- and in other case Rs. 80,000/- is available for deduction
• * S.80 DD Deductions on Medical Expenditure for a Handicapped person the deduction of Rs.75, 000/- is available for expenditure made for medical treatment or payment deposited to the specified scheme. If a person is having a severe disability, a deduction of Rs.1,25,000/-
• * S.80 U Deductions on Person suffering from Physical Disability (Including Blindness) or mental Retardation deduction of Rs. 75,000/- and in case of severe disability, deduction of Rs. 1250000/-
• * S.80 G Deduction for donations towards Social Causes deduction had been categorized according to the donation which can be 100% or 50%

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Read Also:Easy Guide to File ITR 1 Online for AY 2019-20

Best Ways to Save Tax for Income Tax

• The Choice to Invest in Tax Saving – Investing your hard-earned money into tax-saving instruments is one of the best ways to save on taxes. As per Section 80C of the Income Tax Act, you can claim tax deductions of up to Rs 1.5 lakh. The following investments are available to you:
  • Public Provident Fund (PPF): A 15-year lock-in period applies to these government-backed investments. After 7 years, you can partially withdraw your funds and earn 8% interest.
  • Employee Provident Fund (EPF): Employees with salaries participate in this retirement plan. An employer deducts 12% of the basic salary and Dearness Allowance (DA). The funds are then deposited in government-recognised provident funds.
  • Sukanya Samriddhi Account: Invest in a maximum of Rs 1.5 lakh yearly in this government-backed project. you can earn interest up to 8.5% as a parent of a girl child, and opens an account with the name of your girl child.
  • National Saving Certificate (NSC): These are locked in for a minimum of five years. An annual interest payment of up to 8% is compounded.
  • Fixed Deposit of Tax Saving: Fixed deposit products have a minimum lock-in period of five years. A range of 7% to 9% interest can be earned.
  • National Pension Scheme (NPS): This is a government scheme for social security, which provides retirement advantages to employees in private, public, and unorganised sectors. It furnishes two accounts that are Tier I and Tier II. The former is a compulsory account and permits the withdrawal of accounts only after the retirement process.
• Save Taxes for Voluntary Donations – You may be able to save taxes by making voluntary donations. There are many relief funds you can support, including the PM relief fund, funds for the control of drug abuse, the clean Ganges fund, and non-profit organizations. The Income Tax Act, Section 80G, exempts all of these donations from taxation.
• Brings a Home Loan – Are you aware that home loans can also provide tax savings? Interest and principal payments on your home loan are tax-exempt under Section 80C of the Income Tax Act.
• Restructure of Employee’s Salary – Employees are able to request that their employer restructure their salary to allow them to receive tax-saving allowances. Among these allowances are personality development, House Rent Allowance (HRA), medical treatment, conveyance, etc. Tax-exempt leave travel allowances are also available twice every four years

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Donation for 100% Deduction as Follows:-

• National Foundation for Communal Harmony
• An approved university/educational institution of National eminence
• Zila Saksharta Samiti is constituted in any district under the chairmanship of the Collector of that district
• A fund set up by a State Government for medical relief to the poor
• National Illness Assistance Fund
• National Blood Transfusion Council or to any State Blood Transfusion Council.”

“Donation for 50% Deduction are as Follows:-

• Prime Minister’s Drought Relief Fund.
• National Children’s Fund.
• Indira Gandhi Memorial Trust.
• The Rajiv Gandhi Foundation.”

13.S.80 RRB Deductions on Income by way of Royalty of a Patent deduction up to 3 lakhs or income received whichever is less.

Some Measure Steps to Save Income Tax:-

• Launch an employment programmer the person who set up his own entrepreneur can save his income taxes by keeping his money in the company instead of by showing his income
• Parents can save money by taking benefits from tax by adopting some child’s plan if he is below 17 years of age and if the child is studying in college, parents can show the money as tuition fees due to which parents can get relief from income tax
• Tax-deductible mortgage interest means that if homeowners keep the mortgage as long as they will be benefited from the tax
• Save money for retirement it will be benefited you in two ways first it will save money for the future and second it will save the outlet of income tax money from your income
• The charitable contribution is the best wave to save your outflow of income
• To be insured, whether the insurance is for life, health, etc. and the insurance should be for yourself, your spouse and your children

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Want to Save Income Tax

• Get adequate Insurance cover up to Rs. 1 Lakh on Life Insurance and On Health Insurance up to Rs 15,000
• Allow Risks of investing in equities invest in equities, which are based on mutual funds (ELSS) and Insurance cover with exposure to equities
• Planning for retirement than investment safety make an investment under National Savings Certificates and Senior Citizens Saving Scheme
• Section 80 C is applicable above all the points for deducting the insurance and money will be in your hand after some time

Act Smartly and Save your money by paying Income Tax but, in the right way and in the right manner. You can use SAG Infotech-made Gen income tax software, the fastest way of online e-filing.

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