29 Apr 21 Best Income Tax Saving Exemption Rebate Ways Tips in 2020 for money controlling saving investing making earning ways tips ideas tricks quotes
For saving more money from income tax or getting more tax exemption or rebate under income tax act, there are many different ways which are very beneficial. By adopting these beneficial ways a quite good amount of money can be saved for more money controlling saving investing making earning purpose.
1) Income Tax Rebate on Payment of Children’s Tuition Fees
Many people pay quite good amount of money in the form of children’s education tuition fees. In income tax laws, it is a provision to reduce taxable income by claiming of children’s education tuition fees till Rs. 1,50,000/- under Income Tax Act Section 80 C.
2) Income Tax exemption on Housing Loan Payment
Any person who is repaying installments of housing loan, then repayment of EMI can reduce tax. Repayment of principal amount and interest, both’s benefit can be gotten. Tax benefit becomes high if house loan is first. Housing Loan Repayment can be claimed in both, in housing loan’s interest upto Rs 2 Lakhs under section 24 and in housing loan’s principal amount repayment upto 1.5 Lakh under section 80C.
3) Income Tax Rebate on repayment of education loan
Rebate can be claimed on EMI paid against education loan. Payment of interest on education loan can be deducted under section 80 E of Income Tax Act.
4) Income Tax Rebate on payment of health insurance premium
Payment of health insurance policies and preventive health check up also come under income tax rebate section 80D. For getting this benefit, do not pay premium in cash and prefer to pay by any banking transaction mode.
Medical premium payment of Rs 25,000/- per annum is rebate able for a married couple while senior citizen married couple above aged 60 years can get rebate of Rs 50,000/- per annum.
Rebate of Rs. 25,000/- can be also claimed on medical insurance payment for parents while if parents are senior citizen then income tax rebate amount is Rs 30,000/- per annum.
5) Income Tax rebate on medical expenses of disabled dependent
Any person who incur different medical expenses of his/her disabled dependent family member, then in this case that person can avail rebate in income tax under section 80DD. This rebate is an encouragement by income tax department for better care of disabled dependent family member.
6) Income Tax Rebate on treatment of some specific disease
Income tax Act offer some tax rebate on expenses incurred on treatment of some specific serious diseases like Cancer, AIDS etc.
7) Income tax rebate on charitable donations
Income Tax Act offer rebate on tax to any person when money is donated in the sense of kindness, generosity or welfare purposes. Many different type of donations are covered under income tax act 80G for tax exemption. Donators can avail rebate of income tax for their donations.
8) Income tax exemption on donation for scientific research and rural development purposes
All the donations to notified approved association or institution for scientific research or rural development purposes are eligible for income tax exemption under income tax act 80GGA.
Likewise many investments for these purposes also come into tax exemption under Income Tax Act Section 80C.
9) Income Tax exemption on ELSS Funds (Average Returns have been 13.18% Per Annum for past 3 years)
Equity Linked Saving Schemes funds have been good source of earning good returns for last many years as well as gains up to Rs. 1 Lakh are tax free under income tax act section 80C. SIP (Systematic Investment Plans) are good option for investment in ELSS Mutual Funds with minimum 3 years Lock-in-period. So keep investment some years for earning good return and getting benefit of tax exemption in ELSS Mutual Fund Investment.
10) Income Tax exemption on Post Office’s NSC (National Saving Certificate) From April 2020 onwards interest rate is 6.8% Per Annum
NSC issued by Indian Post Office has a lock-in period of 5 or 10 years. Interest earned on new NSC’s Investment is also eligible for tax exemption under income tax act. So tax payers can claim tax rebate under section 80C.
11) Income tax rebate on NPS (New Pension Scheme) there is not any fixed interest rate on NPS, but it can be between 8% to 12%
NPS money is normally invested in Equity, Corporate Bonds and in Government Bonds etc. Tax exemption of Rs. 1.5 lakh can be claimed on the employee’s and employer’s contribution (total of both’s contribution) towards the New Pension Scheme (NPS) under Section 80CCD(1), 80CCD(2). Apart from this additional deduction of up to Rs 50,000/- is also eligible under Section 80CCD(1b). Average return on NPS has been approx. 9.33% for past 5 years.
12) Tax rebate on investment in EPF (Employee Provident Fund)
In those companies, where EPF (Employee Provident Fund) is mandatory, there 12% of basic salary goes in EPF (Employee Provident Fund) Account. EPF Investment provides quite good return as well as a good tax exemption under income tax act. After completion of 5 year service, both interest income and maturity amount are tax exempted. Presently in 2020 year interest rate on EPF is 8.65% per annum.
13) Income Tax exemption on VPF (Voluntary Provident Fund)
Voluntary Provident Fund (VPF) is a scheme which is related to EPF. When any employee who have EPF (Employee Provident Fund) want to contribute more contribution from his basic salary with DA (apart from 12% mandatory contribution of EPF) in EPF Account, then EPF Account turns in VPF Account. Anyone can invest up to 100% of his/her basic salary with DA by his voluntary contribution.
Under Section 80C of the Income Tax Act, 1961, VPF Account is eligible for tax benefits of up to Rs.1.5 lakh. The interest which is generated from this VPF contribution is also exempt from tax. Interest rate is same as of EPF Account. VPF is considered one of the best accounts among many investment options.
14) Income tax rebate on PPF (Public Provident Fund) Account
PPF (Public Provident Fund) is also considered a good long term investment option by both points of view, first for safe good return earning as well as tax exemption under income tax act. Though PPF has 15 years lock-in period but some partial amount can be withdrawn after some years.
Up to 1.5 Lakh annual investment is tax exempted under income tax act 80C. Likewise interest income is also tax free. From 1st April 2020 to onwards, compounding interest rate on PPF is 7.10 % per annum.
15) Income tax exemption on Sukanya Samriddhi Scheme
Sukanya Samriddhi account or scheme was started on January 22, 2015
by government of India as an initiative to encourage ‘beti bachao beti padhao’ campaign. This scheme is only for those who has girl child. The main purpose of this scheme was to encourage girl children’s parents to build money fund for future education, career & marriage expenses of girl child.
Principal amount investment up to of Rs. 1.5 Lakh is tax exempted under Section 80C of the Income Tax Act, 1961. The interest earned as well as the maturity amount are also tax free. One of the maximum interest rate of 7.60% annually (from 1st-april-2020, onwards) providing scheme than other saving scheme.
16) Income tax rebate on Life Insurance Premium
If any person pays his/her own life insurance premium amount then that is tax deductible up to 1.5 Lakh under section 80C only if after 1st April 2012 in any single financial year, premium amount is 10% of the sum assured of that policy. Otherwise life insurance policies premium paid is not tax deductible.
Likewise if any person pay premium of someone else’s policy then in this case first person (who pay premium amount) can claim for tax exemption of premium payment for other person’s policy.
17) Income tax exemption on pension funds
In present scenario when government jobs and government jobs’ benefits are continuously shrinking then it is imperative for everyone to make plan for retirement pension fund from first earning.
Any person can claim tax exemption up to 1.5 Lakh on certain pension funds contribution under section 80CCC of Income Tax Act 1961
18) Income Tax Exemption on SCSS (Senior Citizen Saving Scheme) from 1st-April-2020, onwards interest rate is 7.40%
SCSS is an initiative by government of India which offers safe investment with assured return & regular income to senior citizen. This is a five year lock-in period investment plan with one of highest assured interest rate return of 7.40%.
Interest income up to Rs 50,000/- is tax free in any fiscal year under section 80C. Because of safe investment option with good assured return & regular income, SCSS is considered a good tax free investment option for senior citizen.
19) Income Tax Rebate on Fixed Deposits (From 1st April-2020, Interest Rates on Bank’s Fixed Deposits are normally between 6 % to 8%)
If any person’s annual income is under tax exemption limit, then after doing FD, give form 15 G or 15 H to bank. Person aged under 60 year has to fill 15 G and person aged above 60 year has to fill 15 H form. After submitting this form, bank does not cut TDS on FD. But, if this form is not submitted in bank then TDS have to pay on more than Rs. 10,000/- interest on Fixed Deposit.
If any person’s income is above tax exemption limit then obviously after doing FD, form 15 G or form 15 H cannot be given to bank for saving tax. It means TDS will have to pay on more than Rs. 10,000/- FD’s interest. But a person can also save TDS on his FD’s interest. If there is any possibility of Rs. 10,000/- or more interest on FD, then do not do FD in single bank. Divide FD’s amount in such a way and do FD in different separate banks that annual FD’s interest remain under Rs. 10,000/- in all banks.
20) Income tax exemption on HRA (House Rent Allowance)
Any person who lives in any rented house (whether he/she gets House Rent Allowance or not) can claim for tax exemption. HRA is not fully taxable which depend on some conditions. Some part of HRA is exempted under Section 10 (13A) of the Income-tax Act, 1961. If anyone doesn’t live in rented house then this allowance is fully taxable.
The House Rent Allowance may be as follow:
a). In that case when actual HRA received;
b). 50% of [basic salary + DA] for those living in metro cities (40% for non-metros);
c). Actual rent paid less 10% of basic salary + DA
21) Income Tax exemption on Leave Travel Allowance/Concession
Any employee can claim of tax exemption on Leave Travel Allowance/Concession (expenses incurred on travelling) under section 10(5) of the Income Tax Act, 1961. In Leave Travel Allowance/Concession, 2 journeys in a 4 year block period are included for getting tax rebate under income tax act. For getting LTA benefit in the form of tax exemption under income tax act, actual domestic journey’s expenses of employee or along with employee’s family members are necessary. Some conditions are mandatory for getting tax rebate on Leave Travel Allowance/Concession.
By adopting above mentioned different income tax saving, exempting or rebate steps anyone can save control make or invest quite good amount of money for all future’s uncertainty or requirement.
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