How to save tax in India?

Answer By law4u team

In India, there are various legal ways to save taxes. Here are some commonly used methods: Utilize Tax Deductions: Take advantage of the deductions available under Section 80C of the Income Tax Act, 1961. This includes investments in instruments such as Public Provident Fund (PPF), Employee Provident Fund (EPF), National Savings Certificates (NSC), tax-saving fixed deposits, life insurance premiums, and tuition fees for children, among others. Invest in Tax-Saving Schemes: Consider investing in tax-saving schemes like the Equity Linked Saving Scheme (ELSS) mutual funds, which offer tax benefits under Section 80C. Claim House Rent Allowance (HRA): If you are a salaried individual and live in a rented house, you can claim HRA as a deduction from your taxable income, subject to certain conditions. Use Home Loan Interest Deduction: If you have taken a home loan, you can claim deductions on the principal amount under Section 80C and on the interest paid under Section 24(b) of the Income Tax Act. Medical Insurance Premiums: Deductions are available for premiums paid for medical insurance policies under Section 80D. The deduction limit depends on the age of the insured and the type of policy. Invest in National Pension System (NPS): Contributions made towards NPS are eligible for tax benefits under Section 80CCD(1B), over and above the deductions available under Section 80C. Make Donations: Donations made to eligible charitable institutions qualify for deductions under Section 80G of the Income Tax Act. Tax-saving Fixed Deposits: Invest in tax-saving fixed deposits offered by banks, which come with a lock-in period of five years and offer tax benefits under Section 80C. It is important to note that tax planning should be done within the boundaries of the law, and it is recommended to consult a qualified tax professional or chartered accountant to understand the specific tax-saving options and implications based on your individual circumstances.

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