Here are four tips to help you create a tax-saving monthly budget-
1. Invest and Take Advantage of Section 80CSeveral investment options are eligible under Section 80C of the IT Act. These investments can help you save up to Rs. 1.5 lakhs in a year. Some of the top options you can consider are-
- PPF (Public Provident Fund)
- Tax-Saving FDs (Fixed Deposits)
- ELSS (Equity-Linked Savings Scheme)
2. Tax Savings on Tuition FeesThere are also provisions under IT laws to help you save taxes on the money you spend on tuition fees of your child. Under Section 80C of the IT Act, you can claim a deduction of up to Rs. 1.5 lakhs in a financial year on the tuition fees.
Moreover, even if you have taken an education loan for your child, there are tax benefits available under Section 80E of the IT Act.
3. Health Security with Tax DeductionsUnexpected healthcare expenses could have a significant impact on your monthly budget. Purchasing health insurance is a smart way to avoid such expensive healthcare costs and also enjoy income tax savings.
Under Section 80D of the IT Act, premiums of up to Rs. 25,000 paid for health insurance in a year can be deducted from your taxable income. If you have a senior family member, Section 80D allows an additional deduction of up to Rs. 50,000.
4. Home Rent and Home LoanIf you are living on rent, you are eligible to get HRA (Housing Rent Allowance) exemption if your employer offers HRA. If you don’t get HRA in case you’re self-employed or salaried, you can still claim a tax deduction under Section 80GG of IT act.
If you’re paying the home loan, you can claim tax deductions under section 80C and 24(b). First home buyers can avail tax benefit on interest amount over and above Rs.2 lakh as per Section 24.
Tax-Efficient BudgetingBudgeting is a skill that you will get better at with time. But rest assured that there are several provisions under the IT laws of our country that could help you save a considerable amount in tax payments.
If you are just starting, the tips mentioned in this post will ensure that you have a solid budget that also helps you reduce your tax burden.
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The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
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