Each tax payer searches way to save his tax and get more net income. In practice, I have meet two kinds of people – one who doesn’t want to spend 1 Rs. on tax and another who asks me to calculate tax payable higher as possible. Here I am talking about first kind of person. So here I will suggest you 5 top ways of tax saving.
Way No. 1:
Claim your expenditure of business:
Many taxpayers do not know what to claim in return as expense. If the expenditure is related to business and revenue nature, you can definitely claim it. Maintain all the bills of expenditure in one separate file. You can claim salary of employee, interest paid on loan, rent of office, petrol expenditure, travelling expenditure, mobile bill , bad debt and most important depreciation. Yes , you can claim depreciation on asset as expenditure. It will be varied between 5% to 100%. so don’t forget to claim it.
Way no. 2:
Investment in insurance:
Investment in life insurance and medical insurance will not only give you insurance cover and bonus but it is smart way of saving tax. Suppose you have invest Rs. 1,00,000 in LIC policy and your income is Rs. 6,00,000. so you have to pay 20% tax on Rs. 1,00,000 (Rs. 6,00,000-Rs. 5,00,000) but as you invest in LIC .your income will be reduced to Rs. 5,00,000 directly and you can save Rs.20,000 as income tax.Investment in insurance also helps you in saving for future and I think it is good habit. You can take policy for your self, your spouse or children.same think is applicable to medical policy. You can claim deduction u/s 80D from Rs. 15,000 to Rs. 20,000 according to your age. You can also get insurance policy on your parents’ name and deduction for same amount is available in addition to deduction for your own policy.
Way No. 3:
Housing loan repayment:
Yes, if you purchase or construct house by taking loan, claim deduction for installment on loan paid u/s 80C in income tax return. You can also claim deduction for interest on housing loan u/s 24(b) under income from house property head.
Interest payable on loan borrowed for construction, repairing, renovation, purchase can be claimed without any limit. Even pre construction interest can also be claimed in 5 equal installments starting from the year of completion of construction. For self occupied property: Rs. 1,50,000 deduction is allowed if loan is for construction or purchase, have taken on or after 1/4/99 and construction is completed within three years from the year end when loan is taken. else the deduction is restricted to Rs. 30,000.
Way no. 4:
Capital gain tax:
Capital gain is huge burden of tax while saving property. But be aware of deduction u/s 54 to sec 54GA will reduce your tax burden. You have to invest in another property to save tax. If you can’t find property instantly, deposit the amount in capital gain tax saving account scheme. You can use the money in account to purchase when you find right property within prescribed time limit. I will discuss all the deductions in my next article. So subscribe to my news letter to know more about saving capital gain tax.
Way no. 5:
Carry forward of losses:
Do you know your past business loss can save your tax? Yes, you can carry forward of losses from various head. You should know the rules about it and save tax properly. Past losses can set off your present losses and you can reduce tax burden. Yes, you have to wait a little to know more. Wait for my next article for detailed explanation.
I have suggest you the ways of saving tax. Some are new and some are which you know. Try to know more about tax so that you can invest and claim properly. Click on share button to inspire me to write more. You can give another ideas of tax savings in comments section.