Income Tax News: A vital component of the economy that promotes social progress and wellbeing is taxation. However, we cannot deny that higher tax rates occasionally put taxpayers—particularly those with large salaries—under financial hardship. Actually, maximising tax benefits while abiding by income tax regulations is akin to perfecting a difficult craft. In India, if your income is ₹20 lakhs or more, careful tax planning and management can significantly improve your financial situation. The good news is that you can legally lower your tax liability while still adhering to the law.
Invest in Tax Saving Plans
One of the most well-liked strategies to reduce taxes and get respectable returns on your assets is through Section 80C. You can invest in the following options to receive tax benefits of up to ₹1,50,000 annually:
- Life Insurance Policies
- Public Provident Fund (PPF)
- Employee Provident Fund (EPF)
- Home Loan Repayment and Stamp Duty
- Equity Linked Saving Scheme Funds (ELSS)
- National Savings Certificate (NSC)
- Sukanya Samriddhi Yojana (SSY)
- 5 years Fixed Deposit
Health Insurance Premium Deduction
Health insurance provides protection from unanticipated expenses financially. A health insurance coverage can provide you with significant tax deductions in addition to this safety net. You, your spouse, and your children are eligible to claim up to ₹25,000 in reimbursement for health insurance premiums under Section 80D. You can get up to ₹50,000 in claims if you’re an insured person over 60. In addition, you can claim up to ₹25,000 (₹50,000 for those over 60) if your parents or dependent elderly citizens hold health insurance policies.
Education Loan Interest Deduction
Taking up an education loan is an excellent strategy to save income tax on a salary of 20 lakhs. You can deduct interest from your loan for up to eight years after the repayment date if it was taken out for yourself, your spouse, your children, or any dependant over whom you have legal guardianship under Section 80E of the Income Tax Act.
Home Loan Principal Deduction (Section 80C)
You can deduct up to ₹1,50,000 off the principal amount of your home loan under Section 80C. Furthermore, Section 24b allows you to claim interest of up to ₹2,00,000. For those with high salaries, it can be a significant tax-saving strategy.
Tax Deductions for Disabled Dependents (Section 80DD)
If you are paying for your disabled legal dependent’s medical expenditures, you are eligible for the following deductions under Section 80DD:
- Up to ₹75,000 for 40% disability
- Up to ₹1,25,000 for 80% disability
Tax Deductions for Charitable Donations (Section 80G)
Donations to charities are tax deductible 50%–100% under Section 80G. It means that by contributing to qualified charity trusts and organisations, you can avoid paying almost the entire amount of taxes.