10 Easy Ways to Save Income Tax in India for 2017-18

• 14139
• 

There is no limit on the dreams of the people when you ask them that how much they want to earn. But when it comes to income tax payment, people shrink their feet and wish to pay as low as possible. Whenever it comes to tax saving, the first name that most of the experts suggest is investment in ELSS funds. This is because they provide multiple benefits of tax savings and wealth creation.

ELSS fund is the king if you want to get deduction on your taxable income. Other than mutual fund investments, there are many other ways through which you can avail tax benefits. The Income Tax Act of India, 1961 provides several options through which one can easily avail deductions under the specified section of the act. Let’s explore them all:

1. Benefits of 80C: Well, there is no doubt to discuss about the benefits of 80C in the first point when we are discussing about the ways of saving tax on our income. We’ve already discussed about the Equity Linked Savings Scheme (ELSS) in the opening paragraph. But, it will be partiality if we skip the other instruments too which are also eligible u/s 80C for providing tax benefits. They are: 
   
   • Public Provident Fund (PPF)
   • National Savings Certificate (NSC)
   • Principal Amount Repaid on Home Loan
   • Life Insurance Premium
   • Deposits with maturity period of minimum five years in bank & post office
    
   However, there are many options available to redeem the benefits under 80C, but the best one is ELSS because of its amazing feature of wealth creation.
2. Maturity Amount or Claim by Life Insurance: The amount received on account of maturity or claim of an insurance policy exempt from tax provided as per amendments introduced in the Finance Act, 2003. The premium paid on such cases should not exceed 20% of the amount which was assured. So, if you have any such income, it is exempted from taxes. For example, if the annual premium received by you is Rs. 20,000, the minimum amount that was assured under the policy should have to be minimum Rs. 1,00,000 to qualify for the exemption. In case the premium is more than 20%, the entire proceed would be taxable.
3. Education Scholarship: If you have received any amount for education, then it is considered to be non-taxable. The amount granted thus can be either by a government or a private trust.
4. Profits on Sale of Equity Mutual Funds or Shares: The profits that you earn on your investments in shares or equity mutual funds are fully non-taxable if the holding period exceeds one year. In other words, such profits are also known as long-term capital gain. So, if you sell your equity, either shares or mutual funds, before the period of one year, the profit thus accumulated would be taxable. For example, if you have invested in the equity of worth Rs. 1,00,000 and after 350 days its value grew to Rs. 1,30,000, and you sold it on that day. As it has not completed one year, you need to pay tax on the profit that you earned, i.e., on Rs. 30,000. You would have paid no tax if you held the equity for 15 more days to complete a year, and could have sold it after that.
5. Dividend Received on Equity Mutual Funds or Shares: The investors of Equity mutual funds or Shares receive some dividends periodically which are completely tax-free. Suppose, you have bought stocks of Rs. 1,00,000, and received dividends of Rs. 3,000 after holding them for 10 months only. No matter, even if one year is not completed, the dividend received on the stocks are free from taxes.
6. Gift Amount Received on Marriage: Did you ever know that the amount that people receive as gifts on marriage is not taxable? However, it is probably a one-time benefit, but still it counts under the benefits when we are talking about the tax exemption. So, if you are going to get married this year or later, you might be lucky to know it that you can save all the monetary gifts, be it cash or cheque from tax that you would be receiving in your marriage.
7. Interest Earned on Savings Account: Most of the people might not be aware of the tax benefits that are provided by the Income Tax Act of India, 1961 on the interest earned on savings account. The interest that you earn from your savings account is free from tax up to a limit of Rs. 10,000. This limit is applicable to a total of the interest that you earn on all your savings account. It means that you are eligible to escape up to a total of Rs. 10,000 from the saving’s account interest that you earn.
8. Medical Insurance: Various sub-sections under section 80D state that an amount of up to Rs. 15,000 can be claimed for deduction for medical insurance of self, spouse, and dependent children. Moreover, Rs. 20,000 can be claimed for deduction for the medical insurance of the parents above the age of 65 years.
9. Donations for Social Causes: According to section 80G of the Income Tax Act of India, 1961 various specified donations are eligible for deduction of either 100% or 50% with or without any qualifying limits as provided in the section 80G. Earlier, it was provided that no deduction is applicable if the donation is made over Rs. 10,000 in cash. But, from the current financial year onward, i.e., 2017-18, the limit has been understated to Rs. 2,000 in case of the donations made in cash for availing the deduction. However, the donation exceeding Rs. 2,000 made other than in cash mode can be claimed as deduction.
10. VRS benefits U/S 10(10C): VRS stands for Voluntary Retirement Scheme that applies to an employee who has completed 10 years of service or is above 40 years of age. As per the section 10(10C) of the Income Tax Act, 1961 any payment received by an employee at the time of his voluntary retirement is exempted from tax up to a maximum of Rs. 5,00,000.

Not only the deductions which are mentioned above, but there are also some more, that may help you to save a significant amount of money from income tax. If you are eligible for any of the deductions as mentioned above, then you must avail it.

In the end note, we want to wrap up this write-up by saying that from all the above ones, the best is the ELSS investment, because it helps you to fetch the benefits each year and that too superior than the other contenders in the category. So, without wasting the time anymore, avail the best benefit of up to Rs. 1.5 lakh by investing in ELSS schemes at our portal, i.e., MySIPonline.