There is multiple productive way of saving tax. You head that right. Now taxpayers can easily save tax legally. Most taxpayers are unaware of tax-free income. With the amount saved, taxpayers can invest double and drive better revenue.
But how is it possible save tax legally?
Diligen gives you 15 productive way of saving tax in this blog.
15 Ways To Save Tax Legally That You Should Consider Now
1. Saving Account Interest
Creating a saving account is one of the most common practices conducted by individuals anywhere. At the time of the tenure, individuals can withdraw the money as required. Whatever the interest is on the saving account, it will be exempted. This is allowed up to Rs 10,000, and for senior citizens, Rs. 50,000.
2. Non-Reliable External Account Interest
Having an NRE account is common in their hometown for those working abroad. With this account, they can easily store their foreign earnings. Any interest present will come under tax-free income to support this initiative further.
3. Life Insurance Policy
Creating a life insurance policy is one of the best ways to conduct legal tax deductions. Individuals can collect their maturity amount once the tenure is completed. The tax exemption is possible if the premium amount does not exceed 15% of the sum insured. The percentage has dropped since 1st April 2012 policy.
4. Scholarships
Many students wish to study abroad. Due to this, the number of scholarship applications has increased. Students who receive the amount come under the tax-free income category. This is applied to any scholarship amount received, be it private or public funding.
5. Gifts
Gifts can be of any form. Most individuals provide money in the form of hard cash or cheque. In such cases, any tax deduction is exempted. This comes under Section 52 (2).
6. Agriculture
As per section 10(1), any amount received via agriculture activities falls under a productive way of saving tax. This includes rent, revenue, or any amount received via agriculture. Any amount collected is tax exempted.
7. Second Income
Most individuals, especially working professionals, have started to earn a secondary income. This helps them to maintain their expenses and save money. This extra income can reap the benefits of save tax legally process. You can create an account under Section 80C to make this possible.
8. Inheritance Proof
In India, one of the most common processes of inheriting wealth from families is via a will. Any amount received by the set family member will be tax exempted.
9. Provident Fund
In most corporates, provident fund is a common process. Here employees will have an amount deducted. That amount can then be withdrawn or continued after leaving the company. Thus for how long the employee is in the company, the provident fund amount will increase. Therefore any amount received will be tax exempted.
10. Loan
Multiple students undertake a loan to fund their studies. This could happen if they wish to study abroad or in their home country. When they undertake a loan amount, there will be interest. Since you’re taking a loan for education, you fall under section 80E of the income tax act. This means there is no tax under the interest amount paid.
11. Donation
Under the income tax act of section 80G, donations are tax exempted. Donations are a great way to save tax legally. To access this benefit, individuals are required to provide proof for this action.
12. Business Travel
Most corporates require to travel for work. This travelling can be in any form. To name a few are outside city travels or within limit travels, etc. Businesses can save tax legally here as well. All they require to do is claim the expenses under the business tag.
13. Food
The same can be tax exempted when employees travel and pay the food bills. All you require to do is to claim these expenses under business.
14. Gratuity
Gratuity is another excellent way to save taxes. Employees who stay at a company for a long time can receive this. The tax-free option is limited up to a sum of Rs. 20 lakhs.
15. Travel Allowance
This amount can be tax exempted if employees have the leave travel allowance policy. Under section 10(5), any member dependent on the salaried employee can avail of this benefit. Here only ticket costs will be covered.
Summary
With the income tax act, multiple taxpayers are always looking for ways to save their taxes.
Thus, understanding the tax-free income process helps your investments to be enhanced.
Now that you’re aware of the tax deduction process, it’s time to get started.
With Diligen, any tax-related activity becomes simple. From book-keeping to planning tax strategies, Diligen’s team of experts is here to help.
Schedule a call today to understand how the benefits of Diligen services.
