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Tax Saving Tips

With March around the corner, it’s time you start thinking about your tax-saving investments for the year if you haven’t done so already.

Scrambling at the eleventh hour could mean getting rushed into investments not best suited for you

 

We can all get tax breaks when we donate, pay insurance premiums, incur medical expenses and repay educational loans.

 

Donations

 

  • Eligible for Sec 80G provided you give money, no benefit if you give in kind. Cash donation is eligible only up to Rs 10,000 per year, if you plan to give a bigger sum, do so by non cash modes.

 

  • Most Government entities donation amount is entirely tax deductible, the deduction is limited to 50% of the amount for most non government entities.

 

Insure your health

 

  • Section 80D offers tax breaks on this. You can get a deduction of Rs 15,000 a year for the premium paid to get health insurance for yourself, your spouse and children. This goes up to Rs 20,000 if you are a senior citizen.

 

  • If you pay the health insurance premium to cover your parents, you get an additional deduction of Rs 15,000 per year (Rs 20,000 if your parents are senior citizens)

 

Claim Medical Expenses

 

  • Section 80DD offers this tax break if you incur expenditure for medical treatment of your spouse, children, parents or disabled siblings.

 

  • The deduction is fixed at Rs 50,000 per year and goes up to Rs 1,00,000 per year if the disability is severe.

 

Claim Interest on Loans

 

  • Section 80E allows for interest paid on educational loans or home loans. It allows for the entire deduction of the interest paid on loans to fund self education, or that of your spouse, children or someone you take care of. The loan must fund a government recognized course of study. Also the loan must be taken from an approved financial institution.

 

  • Home Loan Repayment: The principal repayment is eligible for tax deduction up to Rs 1 lakh per year under Sec80C. The interest is also allowed separately under Sec 24. If the house is self occupied, interest payable is deductible up to Rs 1.50,000 lakh per year, if you earn rental income the entire interest is allowed as deduction. The 80C deduction alone can save you Rs 30,900 in taxes if you are in the 30% tax bracket.

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