Income Tax Saving Tips: 10 ways that can help you reduce your income tax to zero

To save tax for the Financial Year 2023-24, there are some tax deductions that you can claim for tax exemption on investments, earnings and other types of payments. With investment in these schemes, or if you are already availing some of these options, your income tax can be reduced to zero.

The easiest and best saving option for income tax savings is Section 80C. Many types of tax exemptions are available in this section. Photo: Unsplash/Representational

Income Tax Saving Tips: Only a few months are left to save income tax for the Financial Year 2023-24. These days, offices are asking their employees to submit investment proofs. There are many investment schemes which can help you save your income tax a great deal.

Its good if you have made investments to save tax, but, if you haven't, there is still time.

To save tax for the financial year, there are some tax deductions in which you can claim tax exemption on investments, earnings and other types of payments. In this write-up, we will tell you about those options-

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10 options for income tax savings

1. LIC, PPF, NSC investment

The easiest and best saving option for income tax savings is Section 80C. Many types of tax exemptions are available in this section.

You can claim the premium of LIC policy.

You can get tax exemption under 80C on Provident Fund (EPF), PPF, children's tuition fees, National Savings Certificate (NSC), home loan principal.

The exemption limit is Rs 1.5 lakh.

Under Section 80CCC, if you have purchased an annuity plan (pension plan) of LIC or any other insurance company, you can avail tax exemption.

Under Section 80 CCD (1), if you have invested money in the pension scheme of the Central Government, you can claim it. The tax exemption taken together cannot exceed Rs 1.5 lakh.

2. Invest in NPS

If you invest in the Central Government's pension scheme New Pension System (NPS), you get an additional exemption of Rs 50,000 under Section 80CCD (1B).

This exemption is different from the tax exemption of Rs 1.5 lakh available in section 80C.

Employer's contribution can also be claimed in the Central Government Pension Scheme under Section 80CCD2.

There are two conditions for this.

The first is whether the employer is a Public Sector Unit (PSU), state government or anyone else.

The limit of deduction in this is 10 per cent of the salary.

If the employer is the Central Government, the deduction limit will be 14 per cent.

3. Home loan interest will save tax

Tax exemption is also available on home loan interest.

You can avail this exemption under Section 24 (b) of Income Tax.

In this, interest up to Rs 2 lakh comes under the ambit of tax exemption.

This tax exemption will be available only if the property is 'self-occupied'.

4. Save tax with home loan principal

You can avail tax exemption on home loan principal under section 80C.

However, it cannot exceed Rs 1.5 lakh.

Therefore, if you have claimed any other deduction in 80C (all plans of the first point), then remember that it can be only up to Rs 1.50 lakh.

5. Tax exemption on education loan interest

Unlimited benefit of tax deduction on interest on education loan is available.

Tax claim starts from the same year in which loan repayment starts.

Its benefits are available for the next 7 years.

You can avail tax exemption for a total of 8 years.

Tax exemption is available on education loan of two children together.

If a loan of Rs 25 lakh each is taken at 10 per cent interest rate for two children, then annual interest of Rs 5 lakh will have to be paid on a total of Rs 50 lakh.

Tax exemption will be available on this entire amount.

6. Health insurance premium

If you have taken health insurance, you can claim premium under Section 80D.

If you have taken a health insurance policy for yourself, partner, children and parents, you can claim a premium of up to Rs 25,000.

In this case, the age of the parents should be less than 60 years.

If your parents are senior citizens, the tax exemption limit will be Rs 50,000.

Health checkup of Rs 5000 is also available in it.

However, the deduction cannot exceed the health insurance premium.

7. Expenses for treatment of disabled dependents

Expenses incurred on the treatment or maintenance of disabled dependents can be claimed.

You can claim up to Rs 75,000 in a year.

If the disability of the dependent person is 80 per cent or more, then a tax deduction of Rs 1.25 lakh can be claimed on medical expenses.

8. Tax exemption on payment for medical treatment

Under Section 80DD 1B of Income Tax, deduction up to Rs 40,000 can be claimed for the treatment of specific illness of self or any dependent.

If the person is a senior citizen then this limit is Rs 1 lakh.

9. Rebate on loan for electric vehicles

Under Section 80EEB of Income Tax, if you have taken a loan to buy an electric vehicle, tax exemption up to Rs 1.5 lakh is available on its interest payment.

10. House Rent Payment

If HRA is not a part of your salary, you can claim house rent payment under Section 80GG. If your company gives HRA, you cannot claim house rent under 80GG.

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