You must Sign In to post a response.
  • Category: Miscellaneous

    Share some tax benefit ideas

    Apart from income tax, these days we pay many other taxes too. Almost a reasonable part of our income goes out from our pocket in the form of tax. However, they are levied for a good reason, it is always seen as loss from our end. There is one another reason to see it as loss, because, the Government benefits to a middle class people are also getting less these days, which is so obvious in this year budget too.

    So, now my question is, in what are all the legal ways to avoid tax.
    Suggest some investments that gives tax benefits.
    Loans and Interests paid that are deductible from annual tax

    Is it good to purchase from nearby retail stores, farmers market, Milk Man who don't provide bills? Does online purchase reduces/excludes sales tax?
  • #627367
    It's good to consult some expert who is a specialist in this field & also that you believe him. Still adding then few could as listed below,
    1. Most preferred is the PUBLIC PROVIDENT FUND.:- For decades, this has been a favorite savings avenue for several investors and is still standing tall. After all, the principal and the interest earned have a sovereign guarantee and the returns are tax-free.
    2. EMPLOYEES' PROVIDENT FUND :- Is another avenue that helps a salaried individual not only helps save tax through involuntary savings but also accumulate tax-free corpus. An employee contributes 12 percent of one's basic salary each month mandatorily towards his EPF account.
    3. House Rent: If you look at your salary carefully you will find that it has a component called HRA. This allowance can be claimed as a tax deduction, if you live in a rented place. Don' t worry if you don' t get HRA in your salary as you can still get tax benefit as per the provisions of section 80 GG of I-T Act.
    4. Medical Expenses:
    5. Charitable Donations:

    The above could be the schemes that for sure that will save your tax on income & at the same time giving you returns.

  • #627368
    I am a very sincere tax paying citizen of India. How I save few pennies and reduce my tax.
    1. I have some Insurance for which 20 percent of the premium paid is deductible from the taxable amount.
    2 .I deposit regularly Rs. 1.5 lakhs as term deposit for a period of 5 years for which tax is not payable.
    3. I buy few post office saving certificates for which 20 percent tax is deductible from the taxable amount.

    I don't see any other way where we can reduce our tax.

    No life without Sun

  • #627376
    A very interesting thread. Let me mention one way to reduce tax. We donate money every month to various charities. But we can get tax benefits out of this good habit. How? Let me explain.

    If you donate to a fund notified by the Central Government under Section 80G of IT Act, then you would be eligible for a deduction of the amount donated, but it should not exceed 10 percent of the adjusted gross total income. This deduction is also available for donations given for renovation of temples, mosques, and churches, which are approved by the Central Government.

    Some of the funds notified by the Government include National Defence Fund, Jawaharlal Nehru Memorial Fund, Prime Minister's National Relief Fund, Swachh Bharat Kosh, Clean Ganga Fund, etc.

    However, please note that you can't avail deduction of more than Rs. 2000/- if you donate in cash. So, please donate handsomely by cheque, help the Government and religious institutions, keep the receipts carefully and avail benefits under Section 80G.

    Beware! I question everything and everybody.

  • #627382
    There are many ways to save income tax by doing some savings and some other expenses which will give you some concessions. But for avoiding tax if you go for purchases without bills you may not get any benefit but the seller will get benefitted. He will so less turn over and try to avoid paying the tax. In that way, we are helping the merchant to get the advantage. If the shop owner is padding on the benefit to you, then only not talking a bill will help. Otherwise, it will not help you.
    You can save tax by saving some money in PPF. Insurance Policies, and small saving certificates. You can also save some tax by talking health insurance and mediclaim policies. There are some temples and other places of worship where if you donate some money you will get tax exemption. For TTD if you donate some money for free food donation, that amount will give some tax advantage. Similarly, some donations to NGOs for good causes will also attract tax exemptions. Before paying the donation you have to ask them. If they have that sanction they will give you tax exemption certificate.

    always confident

  • #627384
    There are many avenues for tax saving like Tax saving FDs of banks, Post Office schemes, PPF, Medical insurance, Life insurance, Dividend on shares, Interest on Non-taxable bonds of PSUs etc.

    Some of these like nontaxable bonds are for the high-income group while others are suitable for middle-income groups also.

    Many of these avenues for investment are very good for tax saving purpose and the invested amount in that particular year only falls under section 80C. The only thing to be noted is that the maximum rebate benefit given is capped at 1.5 lakh per year. So if a person is earning taxable income of 8 lakh in a year he can take the maximum rebate of 1.5 on it and he will have to pay tax on 8-1.5=6.5 lakh. As per present rate the tax will be approximately Rs 42500. For a senior citizen, it will be Rs 40000.

    The strategies for tax savings depend on how much potential one has for savings or for investment in places from where income is tax-free or taxed at concessional rates.

    Knowledge is power.

  • #627420
    Most often, the salaried class that gets taxed has limited ways to reduce the tax burden. Most CAs or auditors would advise you based on your family situation, needs etc. Generally, the safest way to do is use tax exemption donations, adjusting on Life insurance policies and PF investments. Study or professional related conferences.

  • #627428
    As far as saving income tax by an individual taxpayer is concerned, the benefits available under the following sections of Income Tax act can be availed -

    1. Section 80C - Exemptions up to Rs.1.5 lakhs per annum through investments in a list of schemes and instruments.
    2. Section 80D -Exemption on medical insurance premiums for self, spouse or children. Maximum exemption of Rs.25,000.
    3. Section 80DD- Maximum exemption of Rs.15,000 for individuals and Rs.20,000 for senior citizens for treatment or maintenance of a physically disabled dependent.
    4. Section 80E- Exemption for education loan interest repayment. Full interest amount deductible for 8 years maximum.
    5. Section 80G - Exemption on charitable donations. Maximum exemption of 100% of investments.
    6. Section 80GG- Exemption on house rent paid, subject to a maximum of Rs.2,000 per month or rent paid not more than 10% of income or 25% of overall income.
    7. Section 80GGC- Full exemption on funds contributed to political parties.
    8. Section 80U- Rs.75,000 exemption if taxpayer is disabled and Rs.1.25 lakhs exemption if taxpayer is severely disabled.

    Let us encourage each other in sharing knowledge.

  • #627431
    Thanks for your guidelines. I find them helpful. Now I have a brief understanding on tax exemptions. I get a hope that I can save a reasonable portion of my income, from income tax, that too legally. Thank you all again.
    Sri Vetri
    Spread Positivism

  • #627444
    I was informed by one of the relative that those who have enough funds and does not want to save with banks for lesser interest may opt for Post Office savings bank which can accept deposits up to 15 lakhs and there is no hassles in getting the payments through ATM cards and all facilities like bank. The interest offered is 8 percent. I shall inquire the same and give further details in this forum shortly. Nevertheless when we get even half percent income as extra , we are driven to that scheme and Post offices are also diversifying to banking these days.
    K Mohan
    'Idhuvum Kadandhu Pogum "
    Even this challenging situation would ease

  • #627448
    After reading all the above responses, one thing is not clear to me. Should we donate to save tax? Is it not an expenditure to lose our money? While we try to reduce the taxable amount to save some sum, should we donate and spend our money to save some sum? Is it not a funny way to save tax?
    No life without Sun

  • #627457
    #627448 Both income tax and donation are expenditures. At least, in donation, I get to know for what my donation amount is used. Income tax amount in most of the cases, gets diluted in the ocean of scams. I think, it is okay to spend directly for public, than through a medium. Even Government agrees the same, that is why, they provide exemptions to it.
    Sri Vetri
    Spread Positivism

  • #627459
    In this corrupt world, even the donations we make are not utilized properly. Many donations go in to the wrong hands. It is better to deal directly than through donations. Help a poor child for food and education. Help the needy directly. I don't believe in donations through agencies.

    No life without Sun

  • Sign In to post your comments