Filing the Income Tax Return (ITR) can be helpful in different aspects of life, such as opting for loans, going on foreign holidays, applying for visas, etc. Every citizen of the country has to pay the necessary taxes. However, everybody wants to save taxes differently; while some get it right, some fail. Tax evasion is a criminal offence as per the law of the land. Thus, you need to carefully plan tax savings to make the most benefits.
A pension can be a great source of income for retirees, and is one of the most important financial instruments for retirement planning. Under the IT Act, Section CCD (1B), you can get a deduction of up to Rs.50,000 a year towards your payments to the central government pension schemes, without including the deductions you claim under Section 80 CCD (1).
Thus, if you invest any amount up to INR 50,000 a year, the amount will be deducted from your taxable income. Here, you not only save taxes, but can also generate a return on your investment in the pension fund.
Health Insurance policies are not only important for saving taxes, but also for your life and your loved ones. However, if you have a Health Insurance policy for yourself, your spouse, or your children, and you pay a premium, you can get a deduction under Section 80D of the IT Act, up to INR 25,000, and in case you are a senior citizen, the limit goes up to INR 50,000. So, this can help you plan for medical emergencies and healthcare facilities, and also save taxes.
If you have a home loan going on for which you are paying interest/EMI, and the loan was sanctioned between April 1, 2019, and March 31, 2022, you can get a deduction on your taxable amount up to INR 1,50,000 a year against the interest you are paying towards the home loan. However, it has to be your first home loan.
If you are a self-employed or freelancer living in a rented house, you can claim a deduction under Section 80 GG. It also applies if you are employed but do not get HRA as part of your remuneration and live in a rented house. The deduction can be either of these three (whichever is lower) – INR 5,000 per month Rent paid was reduced by 10% of total income before this deduction 25% of the total income ( total income should exclude long-term capital gains, short-term capital gains under section 111A or income u/s 115A or 115D).
Under section 80C of the IT Act, a deduction of INR 1,50,000 is allowed (maximum) on different investments like LIC, provident fund, ELSS, National Savings Certificate, and others. So, this will serve both purposes - you can accumulate wealth by investing in these investment options and also saving taxes. Evading taxes is not only illegal, but also not morally right. There are numerous ways to save on taxes without evading them. It just takes a bit of planning, time, and effort.
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