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What are some unusual ways of saving Income Tax in India?

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 pranesh asked about 3 years ago

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Open uri20170510 32134 ng4pv?1494421709 SONIYA answered about 3 years ago

**some unusual ways of saving Income Tax in India not known to many people is here under :** **HUF CREATION :** HUF is considered as a separate entity which has its own PAN No and is therefore taxed separately This helps to separate tax obligations of an individual from that of his family. Tax slabs of HUF are same as that of an individual, with an exemption limit of 2 lakhs and qualifies for all the tax benefits under Section 80 C, 80D,80G,80L and so on.It also enjoys exemptions under Section 54 and 54F with respect to capital gains. **Stamp Duty and Registration Charges for a home:** Many people don't know that the amount you pay as stamp duty when you buy a house, and the amount you pay for the registration of the documents of the house can be claimed as deduction under section 80C in the year of purchase of the house.An important point to note here is that you should be in possession of the house if you want to claim these deductions. So in case of under-construction properties, you lose out on claiming this deduction. As per the income tax. **Get deduction for rent even without HRA :-** Under Section 80GG, you can claim deduction of the rent paid even if you don’t get HRA. However not many people are aware of this deduction. If you are not being paid any HRA or don’t have any housing benefit from employer. The deduction shall be the least of the following : 1) Rent paid minus 10 percent the adjusted total income. 2) Rs 2,000 per month. 3) 25 percent of the adjusted total income. **Note :** If you are staying with your parents, you can pay them rent. If they don’t have significant income, it would mean you save tax on rent paid and even your parents income does not cross the tax limits, which is a win-win situation. **Declare your losses in tax return to save tax in future :-I**ncome Tax law allows you to set off losses in one against gains in another, depending upon the various criteria.Also if you have only losses this year and no profits, you can show this loss in your tax returns and carry forward and set-off this loss against any future profits for next 8 yrs. **Buy House with Parent or Siblings as joint-owners :-** You can have your spouse/parent/siblings as co-owner and all the co-owners can claims the tax deductions of 1 lacs for principal and 1.5 lacs for interest part . So if you take a housing loan with your siblings as co-owner of property and co-Borrower of loan, the loan amount interest and principle paid will be available for tax exemption in ratio of your loan amount. **Note :** The co-owner who falls in the higher tax bracket should hold a higher proportion of home loan to make sure that the tax benefits are maximized.

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Picsjoin 2017224123730582 Archana answered about 3 years ago

Hie Pranesh, If you want to save your money from Income Tax then you can donate to charity. Narayan Seva Sansthan provides free treatment for physically disabled people, after treatment they give vocational training to them. So you can donate some amount. You may contact them here: Donation, Charity For handicapped, Online Donation Most of the salaried employees might have received a reminder from the HR for submission of proofs of tax saving investments. Are you worried that you have not utilized all the tax saving provisions? Are you staring at a huge tax deduction from March salary? If you have already made the provisions and investments, then it's no big deal for you. But in case you are one of those late movers, time has come to make fast moves. Broadly, there are three ways to ensure that you pay optimal tax; claiming tax free income, incidental actions that bring tax benefits and finally investing/saving for tax benefits. Let us explore them in detail. Claiming tax free income All you need to do here is submit documents to the HR and relax. Your tax outflow will automatically get managed. These are applicable for salary components that are tax free in nature. Here is the list of items: In case you live in a rented apartment and want to make your HRA tax free: Submit 12 month's rental receipt from owner For making medical allowance tax free you need to submit medical bills for the year To make leave travel allowance (LTA) tax free you need to submit travel proofs For conveyance allowance to be made tax free you need to do nothing to prove. Attending work is good enough we guess! Incidental actions that bring tax benefits Here you get benefits for certain positive actions you take in your financial life. Here again all you need to do is to submit proofs to claim tax benefits for those actions. Interest payment on your home loan- this qualifies under section 24 Principal re-payment on your home loan- this qualifies under section 80C tax rebate Insurance premium receipts paid for the year- this qualifies for section 80C tax rebate Tuition fee receipt paid for your children if any- this qualifies for section 80C tax rebate Your side contribution to employee provident fund (no proof to be submitted as the HR already has the records) – this qualifies for section 80C tax rebate Mediclaim premium receipt- this qualifies for section 80D tax rebate Parents' mediclaim premium receipt- this qualifies for section 80D tax rebate Education loan statement (mentioning the interest component)- this qualifies for section 80E tax rebate Investing/saving for tax benefits Here is where you need to plan and act for managing your tax outgo. Broadly here you deal with the provisions of Sec 80C/Sec 80 CCC, 80G and 80 CCG. You are primarily expected to invest in any of the products listed in these sections and in return you get the benefit of paying lesser tax. But there is an upper limit to this. For both section 80C and section 80CCC the upper limit collectively is Rs 1,00,000. Section 80C/80CCC: In case the total amount claimed under 80C from the items that are listed in the above incidental category is totaling to Rs 1,00,000 then just chill. You have nothing much to do under these sections. But if total is less than Rs 1,00,000 then you can make some investments to claim tax benefits. The products that qualify for the same are as follows: Public provident fund Bank fixed deposits (the 5 yr thing) Mutual fund-ELSS ULIPs National Savings Certificate (NSC) Pension Plan Naturally your next question will be which product to choose. Here is our recommendation: On closely looking at these products you will notice that all of them are long-term in nature. As it is a long-term investment, we need to take into consideration the negative impact of inflation while deciding on the product. Inflation robs the value of money as time passes. What a Rs 500 note can buy today it cannot buy after say, 5 years. Probably you need to have a Rs 1000 note! Hence, whenever you make investments that are long-term in nature, the returns you earn necessarily should beat inflation. Only growth assets have the power to beat inflation in the long run. Equities, equity mutual funds, gold and real estate have the power to beat inflation in the long run. Though they are riskier in nature, in the long run they deliver the best value. Income assets like fixed deposits, bonds, traditional investment-cum insurance policies, etc give returns less than inflation. Arranging the section 80C products as per the asset class: Income assets Public provident fund Bank fixed deposits National Savings Certificate (NSC) Growth assets ULIPs Pension Plan Mutual fund-ELSS It is now quite obvious that young and middle aged people should look at growth assets only. ELSS wins hands down over ULIPs since it has far lower costs and charges loaded onto it. This makes it one of the best tax saving instruments available. We will briefly look into it: What is ELSS? An equity linked savings scheme (ELSS) is very similar to a diversified fund - it invests in the broad Indian equity market. It has no stated preference for sectors or themes - it chooses stocks based on the fund manager's research and hypotheses. An ELSS has a three-year lock-in period. Here's how to choose (the rule of three): Avoid funds that have less than three years of track record Avoid funds that have an asset base of less than Rs.300 crores. You can get this figure in the fund fact-sheet (available for download at the fund's site) Rank all ELSS in decreasing order of three-year returns. Choose one of the top three. Be aware, past performance may not be repeated in future Section 80G If you donate an amount to any recognized charity or relief fund, a part of the donation can be claimed as a tax rebate. You need to submit the certificate of donation to HR. A few organizations like the Prime Minister's Disaster Fund enjoy 100% deduction - which means the entire donation paid is deductible from your salary. However, most of the other donations including several religious organizations enjoy only a 50% deduction. If you pay Rs. 1,000 to such an organization, you can claim Rs. 500 as benefit. Section 80CCG This is the newly announced rebate from the government called Rajiv Gandhi Equity Savings Scheme (RGESS). Features are One can invest a maximum of Rs 50,000 Tax rebate of 50% Only for individuals whose annual income is less than 10 lacs Investing in stocks for the first time Investing in BSE 100, CNX 100, PSUs, certain mutual funds and ETFs (list) Lock in of 3 year but can trade after 1 year There is not much clarity in term of execution and procedure. May be you can give it a miss this year or wait for few more weeks to get complete clarity. Recap- here is the check list of documents you need to submit to your HR In case you live in a rented apartment: 12 months rental receipt from owner In case you have home loan: Statement of housing loan with details of principal and Interest components Medical bills for the year if any Tuition fee receipt paid for your children if any Flight & train tickets for LTA claims Insurance premium receipts paid for the year NSC purchased in the year Mutual fund (ELSS) statement Mediclaim premium receipt Parents' mediclaim premium receipt Education loan statement (mentioning the interest component) Bank Fixed deposit receipts

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