Tax-saving provisions in the Income Tax Act 1961.
Under the income tax act, 1961, there are various provisions that list down various avenues through which you can invest money to avail tax rebates. These provisions are revisited every year by the government during the budget exercise in February. The rates of exemption can vary between two financial years, but the instruments more or less remain the same.
Tips for availing tax-saving benefits.
Here are 6 tips for availing opportunities to save tax under various sections.
- For taxpayers whose income does not exceed INR 5 lakhs, the tax rebate under section 87 A has been raised from Rs.2000/- to Rs.5000/-.Effectively, this means that the basic exemption stands at INR 3 lakhs.
- If you are living in a rented house, you are eligible for a deduction of Rs.60000/- p.a instead of the earlier Rs.20000/-.
- For those living in a rented house and wanting to buy one, there is a good news. An additional exemption of Rs.50000/- has been proposed for those buying their first home. The cost of the house and loan amount should not be greater than 50 lakhs and Rs.35 lakhs respectively.
- For those who have a life insurance or a critical illness insurance. They are eligible for exemption under section 80C and 80D as earlier. They provide a combination of security & tax rebates. Term plans are big hits online as they are reasonable, hassle-free purchases and convenient. Critical illness insurance plans are also being considered by many because of the increasing occurrence of critical illnesses followed by the financial setback.
- For those with a mediclaim, renew your medical insurance policy as they are still eligible for exemption under Section 80D.
- Earlier investments like PPF & Pension plans have been untouched as far as their tax benefits are concerned. You can go ahead with renewing or buying them.
Tax-saving is also corpus-building
Although taxes do eat away a major chunk of the salaried class’s income, it would be prudent to invest some amount in the above classes of investments. This way, you’ll be able to save tax also and create some corpus for future utilization.