How to Save Tax for FY 2020-21? - Updated with Feb 2021 Budget?
Friday , March 19 , 2021 13 0
It is a challenging job to pay taxes from the hard-earned money at the end of every financial year for everyone. There are several ways by which our income gets taxed at the federal as well as state levels. In most cases, one has to face a lot of trouble while submitting various rent receipts and insurance forms. But if someone wants, then saving oneself from unnecessary financial stress is also possible simultaneously; one can also end up saving a good amount of taxes.
You must also know the income tax slabs in budget 2021 properly to know which slabs you belong to properly. Though it is tough for someone to avoid taxes, various strategies can still help one get rid of them. To get a clear insight into saving the taxes, one must also have a piece of explicit knowledge about the income tax slab for ay 2021-22 calculator. Let us read about some of the ways that can help to save the taxes for the financial year 2020-2021.
Ways to save income taxes
The list mentioned-below is not an exhaustive one, but it contains all the significant exemptions. There are also many other exemptions that are eligible in different unique situations. You can find out from the information below that these exemptions have limits that have the capability to cover the basic expenses and needs. To optimize your finances, you must first know as well as understand the exemptions and allowances in the first step.
- Contribute to NPS or National Pension System
Contributing to the National Pension System or NPS is known to be the best way to save tax. A deduction is available for Rs. 50,000 under section 80CCD for contributing to the National Pension System. The contribution made can help one invest in the debt pension funds and equity to build the retirement corpus.
Later on, the amount contributed can also be withdrawn at 60 years of age. In case you are a salaried person, and the employer keeps on contributing some amount towards the National Pension Scheme, one can claim deduction under 80CCD (2). On the other hand, it is also to be noted that the deduction is available up to dearness allowance + 10% of the basic salary.
- Get a deduction on the interest that is paid on the home loan
The home loan that you have taken can also have some amount for you. If you are having a home loan and the interest that is payable on it comes under tax-deductible under Section 24 of the income tax act. An amount of Rs. 2 lakh per year is liable under deductions. In case you are receiving house rent form that particular property, then there is no upper limit. Still, the total loss is responsible for a claim in the head of the property's income, which is up to Rs. 2 lakh.
- Secure an amount for the future
One of the easy ways to save money is by following the deduction that falls under the Income Tax Act that any individual can claim. The interest that is being received in the savings accounts up to Rs. 10,000 is tax-free per year, and it falls under Section 80TTA. The senior citizen's limit is Rs. 50,000 for fixed deposits and savings account interest that comes under section 80TTB.
- National Saving Certificate
The National Savings Certificate has a fixed rate of interest and has a tenure of five years. The interest that is being accumulated on the National Savings Certificate is counted as the option for tax saving. As a rebate, an amount of Rs. 5 lakh can be taken under section 80C.
- Pay for health insurance
There is government relief when you pay the premium for healthcare for yourself and your family. Taxpayers are allowed to get a rebate under section 80D up to Rs. 25,000 for the family and Rs. 25,000 for their parents. The limit for the senior citizens has increased up to Rs. 50,000.
- Contribute a bit to charitable institutions
We always end up helping each other as it is the nature of every human being. The contribution made to the relief funds or the charitable trust is liable under the deduction of Section 80G. However, all deductions are not covered under the 80G section of the Income Tax Act.
- Public Provident Fund (PPF)
PPF or Public Provident Fund is one of the best options to save on taxes. This is one of the government established savings schemes. This scheme's availability is for a period of fifteen years that is available in every post office and bank in India. Every quarter the rate of interest changes, and the interest that is accumulated on the PPF is subjected to tax-free.
- Invest in ELSS or Equity-Linked Saving Scheme
Mutual funds offer multiple benefits in addition to the deductions in the tax under the 80C section. Investments that are made on the Equity-Linked Saving Scheme up to Rs. 1.5 lakh each year can be deducted from the amount of the salary that is taxable under the relevant section.
Need for the income tax calculator ay 2020-2021
One of the direct taxes is income tax which the government charges from the income of the citizen. It is earned from the money earned, but it also includes property, business profits, bonuses, capital gains, and income from various sources. There are also rebates, exemptions and deductions provided in the tax collection from the individual's income. Understanding the process and finding out the tax is one of the complex processes. The adjustments and calculations in this procedure also need some assistance. Therefore, most people need the help of the income tax calculator ay 2020-21.
It is an elementary access calculator that helps estimate the tax from the income after the government declared the Union Budget. Many terminologies are involved in the calculation of the tax, and it is also considered one of the hectic tasks. One must even understand the income tax slab fy 2020-21 to understand which slab the tax will fall.
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