How to save income tax: Most taxpayers are aware of the popular methods of tax saving. But there are many ways to save tax, about which people are not much aware.
5 Tax-saving tips: Most of the taxpayers who pay income tax are aware of the popular tax saving methods through which they can save tax. These include investments and expenses like PPF, home loan interest and principal amount, ULIP, life insurance, health insurance, children’s school fees. They also know that on the investments or expenses made in these, they will get tax exemption under sections like 80C, 80D, 80 DD and 80G of the Income Tax Act. But there are many ways to save tax, about which people are not much aware. Today we are going to tell you about some such options, through which you can save huge amount on your income tax.
1. You can save tax on stamp duty also
If you have recently bought a house or are about to buy one, you can also save tax on the stamp duty and registration fees paid for it. This exemption is also available under section 80C only. This information is especially beneficial for those people who have taken a home loan in the last months of the financial year to buy a house and due to this their home loan principal repayment is quite low. In such a situation, if their 80C annual limit of Rs 1.5 lakh is not being met, then they can easily avail the full benefit of 80C by adding stamp duty and registration fees. Keep in mind that you can avail this benefit during the same financial year in which you have purchased the property.
2. Tax exemption on medical expenses of parents
Under Section 80D, you can claim tax exemption on the health insurance of yourself and your family as well as the medical expenses of your parents. For elderly parents above 60 years of age, this exemption can be claimed on expenditure up to Rs 50 thousand. Keep in mind that tax exemption on medical expenses will be available only if your parents do not have any health insurance. Apart from this, tax exemption up to Rs 5,000 spent on preventive health check-up of the family can also be availed within the limit of Section 80D.
3. Payment of interest on ‘home loan’ taken from parents
If you have taken a loan from your parents to buy your house and pay them interest on it, then you can claim tax exemption on it just like you claim on a loan taken from any financial institution. If your parents fall in the lower slab in terms of income tax, then this method will be more beneficial. Tax exemption on home loan interest is available under Section 24B on payment up to a maximum of Rs 2 lakh in a financial year. To avail this deduction, do not forget to formally pay the interest on the loan taken from your parents and then obtain the interest payment certificate from them.
4. You can save tax by paying rent to parents
If you live in a house owned by your parents, then you can avail the benefit of HRA (House Rent Allowance) by paying house rent to them every month. For this, it is important to keep the record and proof of rent payment properly. Tax exemption on HRA is available under section 10 (13A). For this, you should formally pay the rent by signing the rent agreement and also submit the rent payment receipts as proof. It is important to carry out the entire process in a legally sound manner so that your claim is not rejected.
5. Deduction on pre-nursery fees
Most people know that you can get tax exemption under Section 80C on your children’s school fees, but you can also claim the same exemption on your child’s playgroup, pre-nursery and nursery fees. Clear clarification regarding this tax exemption has been given in Income Tax Department’s Circular No. 9/2008 (Dated: 29-9-2008) and Circular No. 8/2007 (Dated: 5-12-2007). This exemption is available only on education fees paid for full time education. This exemption is not available on fees paid to part time school, coaching or development fees, transport or any other item paid to the school. Apart from this, also keep in mind that this deduction is available only for a maximum of two children.
