With the date of filing for returns of tax coming closer, tax saving options are a must for a salaried individual. These options not only help reduce your taxable income but also aid in securing beneficial returns for the future. Here are various options of allowances and financial instruments that you can claim to save on taxes.
You can save up on taxes by getting a health insurance policy which will not only reduce your taxable income but also save your medical expenses. Under Section 80D, you can claim tax deductions for the premiums paid towards the insurance. Health policy covers the cost of hospitalisation and other expenses like ambulance cover and maternity amongst others.
Another way to save on tax is to consider the investment options eligible for deductions under Section 80C. Here are some of the investments that allow you to claim INR 1,50,000 in total per financial year.
Buying a life insurance policy makes you eligible for claiming the premiums paid under 80C and also enables your family to claim the death benefit under Section 10(10D). This policy can be a term plan, endowment plan, money-back policy, etc.
Public Provident Fund is an investment option with a lock-in period of 15-years. The money contributed can be claimed under 80C and the corpus received after maturity is completely tax-free.
ELSS is a mutual fund scheme having a diversified fund that gives lucrative returns in the future. It also can be claimed under Section 80C.
National Savings Certificate is a savings scheme with a lock-in period and can be availed at a post office.
If you are a salaried person living in a rented accommodation, you can claim the rent you pay. House Rent Allowance can be claimed regardless of it being paid to you by your employer. This also applies to self-employed individuals. Under Section 10 (13A), the individuals who are paid HRA by their employer can claim it. For individuals who are not paid HRA, can claim it under Section 80GG. The amount to be claimed can be calculated by the below-given factors. The least amount of the three is the amount which is exempt from tax:
- The actual rent paid annually minus 10% of your basic salary
- The actual amount of HRA given to you annually
- 50% of your basic annual salary (for a metropolitan city)
Leave Travel Allowance is offered to employees for travelling while on leave. But this is applicable only on travel within India. You can this benefit under Section 10(5) by claiming the travel amount for your parents, spouse, children, etc. who are dependent on you.
If your employer reimburses your medical expenses, then you can claim tax exemption to a maximum amount of INR 15,000. The medical bills have to be submitted to your employer for reimbursement. You as well as the dependent family members are eligible under this exemption.