Income Tax News: High incomes frequently have significant tax loads, but savings can be maximised and tax liabilities can be reduced with careful planning. Here are a few practical methods for reducing taxes on an income over 40 lakhs in India:
Utilize Section 80C Deductions
Invest in products like Public Provident Funds (PPF), Equity Linked Savings Schemes (ELSS), National Savings Certificates (NSC), and Employee Provident Funds (EPF) to take advantage of deductions under Section 80C.
Opt for NPS Contributions
To receive deductions under Section 80CCD, make investments in the National Pension System (NPS) (1B). In addition to the Section 80C deduction cap, taxpayers are eligible for an extra deduction of up to Rs 50,000.
Utilize House Rent Allowance (HRA)
Make sure to deduct rent if you are a salaried employee getting HRA and are not residing in housing supplied by the firm. Salary, HRA received, and rent paid are taken into account when calculating the HRA exemption.
Invest in Tax-saving Mutual Funds (ELSS)
To take advantage of Section 80C tax deductions, think about investing in Equity Linked Savings Schemes (ELSS). With a three-year lock-in period, ELSS funds have the potential to yield large gains.
Utilize Deductions for Medical Insurance Premiums
Purchase health insurance for your family and yourself, then take advantage of the Section 80D discounts. Up to Rs 25,000 can be deducted for oneself, one spouse, and any dependent children. An extra Rs 25,000 can be deducted for parents’ health insurance premiums.
Explore Additional Deductions
Benefit from additional deductions such as Section 80E for interest on student loans, Section 80TTA for savings account interest, and Section 80G for contributions to qualified charities.
Individuals earning more than 40 lakhs per year can dramatically lower their tax liability and increase their savings and investments by strategically utilising these tax-saving techniques.