If you are a first-time home buyer during the financial year 2016-2017 you are entitled to an additional tax benefit of up to Rs 50,000 under section 80EE for the interest paid on their housing loan.
In less than 20 days, this financial year (2017-2018) will come to an end. At the beginning of each financial year, we all make many promises to ourselves to manage our money better, invest wisely, and thereby save on taxes.
However just like the resolutions we make on January 1 each year, these also get broken quickly.
This article brings you five ways by which you can still manage to salvage the situation and save on some taxes.
1. Invest in a good health insurance plan
This is a great way to save on tax as well as protect your family and yourself from any unforeseen medical issue. If you still have not bought health insurance, then this may be a great time to do so. Section 80D helps you in getting maximum tax deductions of Rs 25,000 for health insurance premium paid for self and family if you are under 60 years of age and Rs 30,000 for people above 60 years of age.
2. Spend a considerable amount of time analysing your salary structure
Ever wondered what all the various components of your salary are? Examples of these are – House Rent Allowance (HRA), Leave Travel Allowance (LTA), Medical Reimbursement, Telephone Reimbursement among many others. Claiming these can reduce your tax liability if you can submit related proofs to your employer. A point to note however is that many of the employers stop accepting the related proofs towards the end of January. So, at this point, you may not be able to claim all of these exemptions. However, you can still claim a few of them like HRA, LTA while filing taxes.
3. Use Section 80C optimally
Sometimes while we make contributions to various charities, trusts, political parties, and even scientific and research institutions ensure that you are eligible for tax deductions under Section 80G, 80GGA and 80GGC. Do remember to get a certificate from the institution.
Also, remember not to make any cash donations upwards of Rs 2000 in cash.
4. Home loan is also one way to save tax
In a bid to encourage people to invest in property the government provides for a tax rebate in cases where you have taken on a home loan. You are eligible to get a tax reduction on the principal component of your home loan EMIs under Section 80C, while interest component can be claimed under Section 24.
Also, if you are a first-time home buyer during the financial year 2016-2017 you are entitled to an additional tax benefit of up to Rs 50,000 under section 80EE for the interest paid on their housing loan.
5. Tax breaks on education loans
Under Section 80E you can claim deductions for the interest you are paying on education loans taken for higher studies for yourself, your spouse or children. An important point to note here is that there is no upper limit on this tax deduction. You can claim this deduction up to 8 assessment years.
However, since the rate of interest charged by banks on education loans is very high, most financial experts will advise you to repay this on priority.
So make sure you spend some time over the next few days to get your finances and taxes in order. If you know of more ways to help save tax, do share them with us.