Legal Income Tax Saving Criteria for Taxpayers as Per Sections

People used to take no procedure for saving the taxes during the time of filing and lastly file a heavy amount of ITR. Individuals decide to take various steps to diminish the tax outgo post to filing the ITR, however, when they were unable to take any measure at the time of next year's return filing then they regret themselves.

But they are so concerned about taking all the required steps that could diminish their tax liability.

“Complete freedom from taxes is a farce. Rather plan your finances in such a way that you earn and save on taxes. Tax planning sans financial planning is futile. Remember that you work for money in the first half of your life. In the latter half of your life, let your money work for you. This is however not possible unless you have taken care of your taxes too,” said the tax expert.

There would be no additional method that one could secure the whole tax outgo post to reaching some income level, however, might diminish the tax outgo. The income tax-saving investments would not only assist towards securing the taxes however it might assist in achieving various targets of life when the investments would take place according to the purposes of financial planning.

Tax experts mentioned that “There is no escaping death and taxes. This means that achieving complete freedom from taxes is only second to wishful thinking. However, if you are talking about direct taxes, there may be some ways to lessen them, if not avoid them completely. Having said this, escaping the brunt of paying taxes should not be your aim. Instead, manage them skilfully so that you do not end up paying extra. The ongoing tax season has put many people in a tizzy as they rush to park their money in investment options to avail of tax deductions. Taxpayers face this kind of turmoil every year as they care less to learn about the tax-saving investment options available,”

The Steps to Prevent Paying More Taxes:

Those with naive views would quip that not revealing your income allows you to escape paying taxes. In the absence of digital progress, this could have been the case. It would be impossible for the Income Tax Department to not know your earnings with the linking of all businesses and bank accounts with PANs and Aadhar cards.

Multiple Tax-saving Steps Are:

Here are some of the most important multiple steps to save tax as per the income tax sections such as 80C, 80D, 80CCD, and tax deduction under section 80CCD, etc.

Section 80C of Income Tax Act

In the first place, investing in investments covered by Section 80C of the Income Tax Act can save you taxes. Beneath this section in any fiscal year, Rs 1.5 lac could be claimed by the individuals, and Hindu undivided families (HUFs).

The investment options consist of

1. Five-year bank fixed deposit (FD)
2. Senior Citizen Saving Scheme (SCSS)
3. National Savings Certificate (NSC)
4. Public Provident Fund (PPF)
5. Sukanya Samriddhi Yojana (SSY)
6. Unit-linked Insurance Plans (ULIP)

Tax Deductions Under Section 80D

Did you avail of the health insurance? Did you know that you could claim the max deduction up to Rs 1,00,000 (Rs 50,000 for the premiums filed for the self and Rs 50,000 filed for the health insurance purchased for the senior citizen? Through the method, you are not only financially effective but indeed the claim deductions on the health insurance plans.

Tax Deduction Under Section 80EE/Section 24

Purchasing a second home would be the most joyful thing in one life. However, when it arrives at the home loan repayment in which the earned monthly installments (EMIs) would proceed for the interest and the principal part of the borrowed money. You will be enabled to claim the deduction of up to Rs 50,000 on the home loan interest beneath the mentioned section.

There is an additional side to the same income tax advantage. Beneath section 24 you would be enabled to avail of the deduction of up to Rs 2 lakh (Rs 1,50,000 if you are furnishing the returns for the former fiscal year) upon your home loan interest when you or your family lives in house property. While if you give your house on rent then you are qualified to claim the deduction on the whole interest amount furnished in the fiscal year.

Tax Deduction Under Section 80G

The government thinks about the way that how each person is accountable to fulfill social obligations. The same would elaborate on why it rewards you through permitting the claim deductions on the donations incurred to the charitable institutions beneath the same act.

Tax Deduction Under Section 80CCD

The government in the coming years would arrive with the NPS beneath the pension fund regulatory and development authority (PFRDA) that permits you to contribute to making the effective retirement corpus. If you are seeing for saving the tax on your investments then you could claim a deduction up to Rs 50,000 on the amount that you credit to your NPS (National Pension Scheme) account.

Choosing Between Old and New Tax Regimes

There is less difference between new and old tax regimes. An essential thing to watch is that the new income tax regime provides liberalized tax slabs without any exemptions, the old tax is effective for those who have good earnings exceeding Rs 15 lakh in a year hence making them qualified for the deductions of nearly Rs 2.5 lakh.

Asking for tax freedom and thus investment planning would be a blunder. You should pay attention to planning and reserving your finances prior to proceeding with the subsequent stage of planning your tax deductions.