When someone pays his earnings in the form of tax, he feels very sad because it requires a lot of hard work and dedication to earn money. Also, money can be made only by saving money. You pay more tax due to lack of good tax planning. There are many ways to save tax. You can save tax by doing good tax planning. There are many such investment options in the market, in which you benefit from investing, as well as tax benefits. Low risk investors can invest their money in PPF, NSC, SCSS, Post Office Saving Scheme and other options.
These schemes provide tax benefits of up to Rs 1.5 lakh under Section 80C of the Income Tax Act. If you are an aggressive investor and fall in the category of more tax payers, you can avail tax benefits by investing in ELSS and other options. These are some common ways to save tax, but through this article we are going to tell you about some unique ways to save tax.
1. By donating
You can get tax rebate from 50% to 100% on the amount donated by donating. The amount of such tax benefit deducted depends on the nature of the donation. Some donors avail 100% tax deduction under Section 80G of Income Tax Act. There are many institutions in which you can get tax benefits under Section 80G of Income Tax Act by making donations. These institutions include the National Defense Fund, the Prime Minister’s National Relief Fund and the National Communal Harmony Foundation. You can also save tax by donating to your favorite political party. A full tax deduction can be claimed under Section 80GGC on the amount donated to any registered political party. Therefore, you can also avail tax benefits by donating.
2. By paying rent to his parents
If the house you are living in and does not own and your parents live with you, then you can claim house rent allowance in your salary. You need to show proof that you pay rent to your parents every month. Do not show fake rental receipts, because if the receipt is found to be fake, you may face a heavy fine. This way you can save tax.
3. Invest through parents
If your parents are senior citizens, it is easy to save tax. If your parents fall in the lower tax bracket, you can easily save tax. For this, all you have to do is invest in ELSS, fixed deposits or mutual funds. Suppose you have an income of one lakh rupees as interest. Instead of adding it to taxable income in a financial year, you can transfer it to your senior parents without paying tax. Gifting to parents is tax free. They can reinvest this money. Your parents can invest it in SCSS (Senior Citizens Savings Schemes) and avail tax deduction under Section 80C. You can get tax benefits by cooperating with your parents.
4. Reinvest tax benefits
If you do not currently have money that you can invest in tax-saving investment instruments, you can easily withdraw money from your existing investment and reinvest it in tax-paying options.
5. By paying the health insurance premium
You can claim a tax deduction on the premium paid for a health insurance plan taken for you or a health insurance plan for parents. You can avail the additional tax benefit of 25 thousand rupees annually by paying the premium of the parents’ health insurance scheme. If the parents are senior, then there is an additional tax benefit of up to Rs 50,000.
6. By making HUF
You can save tax by creating a Hindu Undivided Family – HUF. Any Hindu family can make a HUF. In this, separate claims can be made for tax exemption under Section 80 of the Income Tax Act and tax laws. To form a Hindu undivided family, you have to open a bank account in the name of HUF. The account is opened in the name of the one who heads the family. It is also called Karta. HUF family members also have a PAN card for a HUF account along with their personal PAN card. For example, suppose you and your wife and two children decide to make HUF, then all four of you can claim tax deduction under Section 80C of the HUF Income Tax Act.