According to Indian Income Tax law, there are certain deductions on which you can save taxes legally at the time of filing Income Tax returns. This can be done by anyone who pays the tax, such as businessmen, individuals, professionals, etc. In order to save some tax legally, you have to get a tax saving plan that works out for you throughout the year and this needs proper planning with some research. To save you some time, we have listed below some tricks through which you can save tax legally-
- Education loan- According to section 80 E of the law, any taxpayer who takes an education loan for himself or herself or for their spouse or children or for someone who is a legal guardian of he or she can claim some deduction and save some tax. The deduction is only applicable on the repayment of interest and not applicable on the repayment of the principal amount of the loan. The taxpayer can claim the deduction on the amount of interest of the education loan to the maximum limit under the law. This deduction on education loans is only applicable for individual taxpayers under section 80 E.
- Home loan- Everyone knows there are several tax benefits of a home loan. One of the advantages is that you can save tax legally if you take or are planning to take out a home loan. According to section 80 C, the person who takes the home loan is allowed to claim some deduction on the principal amount. In addition to this, the taxpayer can also claim some deduction on the interest amount according to section 24. In some cases, a maximum of Rs. 2 lakh is the limit of deduction whereas in other cases there is no limit of deduction in the interest amount of home loan.
- Donations- Under section 80 G of the Income Tax Act, if any taxpayer donates for a charity or social cause or makes a donation for a national relief fund, then he or she can claim a deduction of the amount of donation made towards the cause. In few cases, the taxpayer can claim the full amount of donation made, whereas in other cases, only 50 per cent of the total donation amount can be claimed. The deduction is applicable only for those donations that are made in cash or cheque and not in kind. If the donation is made through cash, only Rs. 10,000 can be claimed in cash, whereas the donations that are made through cheque are eligible to claim a deduction over Rs. 10,000.
- Leave travel- If the leave travel allowance is given by your employer, then you are allowed to claim the amount as a deduction. This deduction is only applicable if the travel is within India and AC Tier 1 for train and Economy class for flights. This claim cannot be made every year, in fact, you can claim this deduction only two times in four years.
There are certainly other ways too in which you can save yourself some amount as a tax deduction. However, these are some of the easiest ways in which you will be able to save some bucks legally.