Budget 2017: Here Are 10 Tax Saving Tips For You To Beat The Taxman!

Post the union budget, the one question on everyone’s minds is how an average salaried Indian will save taxes and maximize his or her income. We covered the budget yesterday in real time here and we also welcomed the tax breaks given to the average salaried Indian. Despite the tax breaks, however, the prevailing high rates of inflation demands that maximum savings are required on whatever amount of money one earns to ensure a proper way of life. To simplify the process, we have listed out 10 means with which you can save taxes.

1. Section 80C of the Income Tax Act mandates that you can save taxes by investing more in your Provident Fund contribution. The more money you will invest in your contributions to the Provident Fund, the more taxes you will save. Besides investing in your Employee’s Provident Fund or EPF accounts, you can also invest Rs 500 to Rs 1.5 lakh every year in a Public Provident Fund or PPF account. This tax-saving window is open to every salaried Indian.
2. Medical insurance is another preferred means of minimising the Income Tax department’s potent glare. Besides other forms of insurance, medical insurance premiums will also cover not only you but also your spouse and your dependent children. Besides the savings made under section 80C, some savings can also be made beyond the ambit of the section. You can save up to Rs 25,000 under ordinary circumstances and up to Rs 30,000 if the insurance is for your spouse or yourself provided you are over 60 years of age. Plus, should you choose to insure your biological parents, you are wont to get an additional deduction of Rs 25,000 which, again, is increased to Rs 30,000 if they are above the age of 60. Note that no such deduction is allowed for your parents-in-law of a sum of up to Rs 5,000 for preventive health check-up even if you pay the total amount in cash.
3. Tuition fees for two dependent children are tax-exempt under Section 80C of the Income Tax Act. The act is applicable if and only if you can provide a receipt of the expenses incurred therein.
4. You can save taxes by investing up to Rs 1.5 lakh every year in the new Sukanya Samriddhi Account opened in the in the name of your daughter. Note that the exemption is limited to two children only.
5. The New Pension Scheme or the NPS is another way to expand the tax exemption amount. All employee’s contribution of up to 10% of the total salary or a self-employed individual’s contribution limited up to 20% of gross total income is tax-deductible. This is subject to an overall cap of Rs 1.5 lakh, which also subsumes investments made under Section 80C. Besides, salaried individuals can also avail an additional deduction of Rs 50,000 under the employer’s contribution to the NPS. This exemption is restricted to 10% of salary and has no upper cap.
6. Post Budget 2017, All your contributions to various Unit-linked Insurance Plan or ULIPs for yourself, your spouse and your kids are tax exempt under the benevolent Section 80C.
7. You can also invest in National Savings Certificates or NSC schemes via our post offices. All investments are tax-exempt under section 80C.
8. You can also save a substantial amount of tax under a 5-year term deposit made with any PSU bank under any notified scheme or even a post office. The provision is retained after budget 2017.
9. If you are paying interest on any Educational loan, it is exempt from tax. The best part is there is no upper limit in this scenario. This provision exists outside the 80C ambit.
10. Lastly, you can save taxes on interest earned on any savings bank account with a designated bank or any post office. The cap on this limit is up to Rs 10,000. No tax deductions on interest earned from a fixed deposit either. The exemption also extends to NRO accounts. The NRO or the Non-Resident Ordinary account is where you can manage your income in India via avenues like pensions and dividends even if you are an NRI.