People constantly seek opportunities to save income tax. Nobody loves missing choices that may save money paid as tax. Different individuals choose different methods. Sometimes people simply stick to the techniques they know and lose out on more effective ways to save tax.
Therefore, this post is aimed at people who wish to discover additional methods to tax-free salaries in India and save money paid as income tax. If you’re considering saving income tax in India, read ahead to discover these tips regarding saving tax for business people and wage-earners.
Income tax is part of the income you pay the government. This tax is collected annually. Authorities utilize this money for administrative purposes.
Income Tax Guide in India: There are two methods to save tax in India:
- By Claiming Expenditures: You’ll have to claim all your business expenses to save income tax if at all you are a business person.
- By investing in tax-saving tools: The Government encourages individuals to save taxes by investing their money in tax-saving schemes specified under various sections of the Income Tax Act. In this manner, you can make sure you have some kind of investment and not worry about too much money spent on taxes and can make a tax-free salary in India.
Save Income Tax Legally in India:
Below are various methods to tax-free salary in India. If you’re wondering how to save income tax in India read the following suggestions. Note that these points may vary slightly depending on yearly updates.
- Tax planning Through Home Loan: You may save tax if you arrange your home loan properly under section 80C. For the main amount, the maximum is Rs. 1.5 lakhs as per section 80C, and the limit is Rs. 2 lakhs as per section 24.
- Income through Savings Account Interest: Overall, interest received on a savings account is excluded for tax purposes at Rs. 10,000. This sum cumulates all saving bank accounts. This ceiling goes to Rs. 50000 for elderly citizens.
- Income NRE Account Interest: Non-resident Indians hold NRE accounts in India. They receive interest on the cumulative sum placed as a fixed deposit. Due to the Indian government’s benevolent attitude towards NRIs, this sum is not taxed.
- Money obtained from Life Insurance Policy: Life insurance policy money may be received on maturity or on receipt of the claim amount. The amount received is free from tax unless the premium exceeds 20% of the covered value. This relates to pre-1 April 2012 policies. For insurance issued after April 1, 2012, the proportion decreases to 15.
- Education scholarship: This is tax-free under Section 10 (16). There are no limitations in such a situation since any amounts earned under private or public scholarships are tax-free.
- Amount Received from Sold Shares or Sold Equity Mutual Funds: If the amount of long-term capital gain exceeds Rs. 1 lakh, a 10% tax is payable.
- Sum Received as share or equity dividends: This amount is tax-free.
- Wedding Gift: Wedding is an exciting time for the whole family, particularly the wedding. In India, it’s a huge celebration showering the bride and husband with presents. Section 56(2) makes such donations non-taxable. Whether a gift, cash, or check, gifts received on marriage do not incur tax. Such presents may come from family or friends.
- Agricultural income: any agricultural income described in section 10(1) is free from tax. Such income may be linked to land rent, land income, the amount produced through agricultural goods, and the amount via a farm building.
- HUF and extra income: If you’re someone who makes secondary income separate from your main income, you may save money as income tax aside from wages. Money gained through freelancing, for example, constitutes supplementary income. You must establish a separate secondary income HUF account. Then you may invest that money under section 80C to use tax advantages for that amount.
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