How I can Reduce my Tax In India

Although it is the duty of a responsible citizen to deposit the tax in time, the government of India has come up with some excellent plants to save your tax in order to encourage savings for the future. 

Under the Income Tax Act, 1961 there are several legitimate ways by which one can save it. The interim budget of 2019 also was proposed a rebate under Section 87A on income tax liability for the taxable income group for Financial Year 2019-20. It might bring a big relief for the low and medium-income group people but still, nothing has finalized.

How to calculate the tax?

There is a certain process of tax calculation by which all the Goods and Services Tax Consultant in India execute it. If you are not aware of the process, then check out here:

The first thing, you have to do is calculating the gross total income from all the sources. Then you have to do another calculation of all the tax deductions or tax breaks and other tax exemption allowances like HRA, LTA, etc you can claim to the IT department. You have to deduct the exemption from the total income to get the taxable income. Depending on the figure, you will have to know how much tax rebate you can get. According to that, you can plan your investment in order to reduce the tax.

What are the ways you can reduce your tax?

There are several ways like NPS, Insurance premium, medical insurance, tax-saving mutual fund, and others by which you can have tax exemption. However, it is only applicable for individual as the income tax consultant in India  will guide you fore corporate tax.

Several Schemes Under Section 80C:

There are several investment plans by which you can save up to 1.5 lakh.

1. PPF: The Public Provident Fund is an investment scheme of the Government which is available in all the nationalized bank and post offices. The tenure of PPF is 15 years and the interest is tax-free.

2. Tax Saver FD: You will get a tax deduction of Rs. 1.5 lakh for 5 years tax-saver FDs. The interest is taxable for Fixed Deposit.

3. ELSS Funds: It is the mutual funds that invest 80% of their equity but you have to lock in your investment for 3 years. You can get an exemption of up to 1 lakh.

4. NSC: The 5 years long National Saving certificate offers a fixed rate of interest that is 8%.

5. Life Insurance: Different types of insurance policies like ULIPs, endowment policies and term insurances can cover up to Rs 1.5 lakh.

6. Home Loan: The repayment of home loan is exempted from the tax that is yearly Rs 1.5 lakh per year.

7. Tuition Fees: Payment of children’s tuition fees is tax-deductible.

8. Sukanya Samriddhi Yojna: This facility is especially for the parents of the girl child. It has a maximum interest rate which is 8.7% and the income is tax-free.

9. EPF: In any organization, 12% of the income of the employees is deducted for Employee Provident Fund.

National Pension Scheme: It comes under Section 80CCD(1B) where you can get exemption up to Rs 50,000 to plan your retirement.

Health Insurance: Under Section 80D, you will get a deduction of up to Rs 25,000 for health insurance premiums.

Home Rent: You can easily claim your House Rent Allowance (HRA) as there is no upper limit.

Donation: You can donate in NGOs & other charitable organizations to get the tax deduction.