A majority of the middle-class population in India spends most of their time on finding ways and means to evade taxes. No wonder, we pay our CA’s handsomely to wriggle us out of the tax conundrum.
Certain investments provide us with a tax rebate. These investments come under section 80C deductions. The amount invested is deducted from our final taxable income.
National Payment Scheme (NPS): One can invest up to Rs 1.50 Lac per year to get a waiver in tax under Section 80C. Further Rs 50,000 can be invested under Section 80 CCD (1B). Therefore, one can invest up to Rs 2 lakh under NPS to get maximum relief from the income tax authorities.
Using Children To Evade taxes
The clubbing of income rule does not apply once the child turns 18. Since the person will be treated as a separate individual for all tax formalities, the concerned family can transfer money and enjoy benefit up to 2.5 lakh basic exemption limit along with all the other deductions and benefits that any other common taxpayer enjoys.
Buy House with Parent or Siblings as joint-owners: –
One can have one’s spouse/parent/siblings as co-owner and all the co-owners can claim the tax deduction of 1 lac for the Principal amount and 2 lacs for interest part. So if one takes a housing loan with his/her siblings as co-owner of property and co-borrower of the loan, the loan amount interest and principal paid will be available for tax exemption in the ratio of the loan amount.
Also read: What Was The Coalgate Scam?
It is important to keep in mind that 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.
Invest in equity shares
There are huge long-term capital gains if an individual invests in equity shares. The government has exempted income tax on the long-term gains arising from the sale of equity shares, provided that these shares were held for more than a period of 1 year. In case, the shares are held for less than 1 year, the tax would be levied @15%.
It is of utmost importance to identify the reimbursements available from the company and take maximum utilization of the same. Normal expenses that one incurs could help save tax.
Example- Telephone/fuel reimbursements, meal vouchers and company car. A person in lower tax slabs can reduce his tax liability to nil with exemptions alone. Similarly, salaried employees staying in rented apartments can claim exemption under Section 10(5) of the Act in respect of house rent allowance by making the HRA a component of their salary.
We hope that the above ways are of use to you and you can save more and more moolah!
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