Income Tax News: To reduce your tax bill, it is essential to have a well-thought-out tax savings strategy if your salary in India exceeds 35 lakhs. It is now harder to take use of deductions under the new tax regime that was unveiled in Budget 2023 if your annual salary is higher than Rs 7 lakh. If you choose to go with the previous system, you can still lower your taxes by making the most of all available deductions and choosing the optimal investment strategy.
Unveiling Tax Deductions Under Sections 80C, 80CC, and 80CCD
IF you are eligible for tax deductions under sections 80C, 80CC, and 80CCD and if you are a salaried worker, you can make investments under these schemes for life insurance, ULIP plans, pension plans, PPF accounts, National Savings Certificates (NSC), fixed deposits, and more, with a maximum deduction of Rs 1.5 lakhs. You can get the most tax benefits from the best retirement plans or ULIP plans. For this reason, term insurance is another option.
Health Insurance Claims
Sections 80D and 80DDB allow you to deduct medical expenses from your taxable income. Spending on health insurance might also be claimed. If you, your spouse, or your kid have taken out an education loan, you may be able to deduct the interest you paid under section 80E.
Tax Benefits of Home Ownership
Savings on taxes is an additional advantage of home ownership. In this instance, you are able to deduct both the principle amount of your house loan under Section 80C and the interest you pay under Section 24. The allowance for house rent that was subtracted from your income is also deductible. Similarly, you can travel anywhere in India twice every four years with your tax-free Leave Go Allowance (LTA) from your job.
Achieving Tax Savings with ELSS Mutual Funds
You can also reduce taxes by investing capital gains from the sale of long-term capital assets in financial instruments. Tax savings can also be achieved with ELSS mutual funds. ELSS investments have a three-year lock-in period and allow you to deduct your contributions under section 80C.
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