The lockdown has been very challenging to various sections of society. Poor struggling for survival and the privileged or middle-class and rich section of the society enjoying sitting at home and working from home. But not all middle-class earning citizens enjoyed staying and working from home in this pandemic. Quite a many people had a moderate or limited income in which they could not live and enjoy a life full of luxury since they also had the tension of paying taxes. India’s majority population comprises middle-class people and they are the only honest taxpayers.
So it becomes necessary for everyone to know how to save your money in an effective and efficient manner by also fulfilling all your wants and dreams. A few common options to invest in tax-saving financial avenues are Public Provident Fund (PPF), National Pension System (NPS), National Savings Certificate (NSC), tax-saving fixed deposit, life and health insurance policies, etc. Other options on how to save tax, that too without making any investment, are explained in this article which will best suit you.
Ways to save tax without making any investment smartly:
1. Taking a home loan: By taking home loans, one is not entitled to pay taxes. As per a new rule, you can claim a tax deduction if your home loan for your first home purchase is sanctioned between 1 April 2019 and 31 March 2022. The stamp duty value of the property shouldn’t be more than Rs 45 lakh. You will have to study in detail other rules and provisions related to claiming tax deductions to get the full benefit.
2. Deductions for medical expenses: every family will incur medical expenses for sure. The best example is in the present situation where you never know how, where and when you may have to incur expenses related to health. So it is better if you get health insurance. If not health insurance, one can claim deductions up to Rs. 5K for expenses incurred for preventive health check-ups etc.
3. Deductions for tuition fees: expenses related to kids’ education costs very much and this expense needs to be exempted from tax. Parents can claim a tax deduction of up to Rs 1.5 lakh for the tuition fee paid for their children’s education. Development fees, late payment fees, and other payments do not come under this benefit but are only applied to the tuition fee. And one salaried individual can claim to only 2 children or a couple can claim up to 4 children only.
4. Increase your EPF contributions with VPF: almost every salaried person saves their money in Employees’ Provident Fund (EPF) which benefits them during post-retirement where they have to save at least 12% of their basic salary and Dearness Allowance (DA) in EPF whereas one can save up to 100% of their basic salary in VPF or Voluntary Provident Fund. VPF is a voluntary contribution over and above the mandatory EPF contributions.
5. By paying rent: if you are living in a rented house and you are a salaried person, then you will be able to save some tax by paying rent to the landlord. You can claim an exemption for the rent paid as per provisions if you receive a house rent allowance (HRA) from your employer. In another case, on not receiving HRA by the employee, you can claim a deduction for the rent paid in respect of accommodation occupied by the individual for his own residence up to a prescribed amount.
Hence before claiming any kind of tax deductions, go through the Acts and laws passed by the respective Departments so that you get the full benefit.
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