How to save taxes without buying investments and insurance

Before you buy more tax savers, assess the tax savings you have already accomplished
How to save taxes without buying investments and insurance
How to save taxes without buying investments and insurance
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In the final quarter of the financial year, there’s a mad dash to buy tax-saving investments and insurance policies. If you’ve planned your tax-saving activities carefully and don’t need to make a last-minute dash now, this article isn’t for you. But if you’ve been slow with your tax-saving, this article will be helpful.

Before you start finalising your last-minute tax-saving measures, you need to take care of one very important thing: take stock of tax-savings you may have already done through the year. How, you ask? Let’s get into the details.

Firstly, Know Your Tax Dues

If your taxable income – income after various deductions – is Rs. 500,000 or less, you pay zero tax. So to maximise your tax-savings, your goal should be to get as close to this mark as possible. The more you earn above this limit, the higher your taxes. You should look up this year’s income tax slabs. If you want to understand your dues further, use an online income tax calculator. Once you understand your dues, you can start assessing tax-saving measures.

Claim Your Standard Deduction

Since FY 2019-20, every salaried tax payer is eligible for a standard deduction of Rs. 50,000 under Section 17(2)(viii). This means that your income before deductions could go up to Rs. 550,000 in a year and you won’t need to pay any taxes. The standard deduction also gives you an idea about how much more you need to invest in tax-savers. For example, if your total income was Rs. 570,000, you can use the standard deduction and buy a tax-saving investment or insurance worth Rs. 20,000, and thus bring your taxable income down to Rs. 500,000 where you pay zero taxes.

Your Home Loan Gives You Massive Deductions

If you have taken a home loan, you have already secured some heavy duty tax savings just by paying your EMIs. Your principal payments (both EMIs or pre-payments) earn you deductions up to Rs. 1.5 lakh under Section 80C. If you’re falling short of tax-saving under the Section 80C limit of Rs. 1.5 lakh, simply pre-pay on your home loan to cover the deficit. With a home loan, you will also earn a tax deduction up to Rs. 2 lakh under Section 24b for interest paid. Additionally, depending on your eligibility, you can also claim deductions for interest paid on your home loan under Sections 80EE or 80EEA.

Medical Expenses Get Deductions Under Section 80D

I would wholly recommend buying a suitable health insurance plan for all members of your family. I wouldn’t advise not having health coverage. But if you weren’t buying health insurance for a genuine reason, you could still claim deductions under Section80D of Rs. 5000 for costs of preventive health check-ups, and up to Rs. 50,000 for healthcare expenses of your dependent, senior citizen parents who don’t have health insurance.

Children’s Tuition Fees Are Deductible Under 80C

Deductions for up to two children’s education can be claimed alongside your other 80C deductions. Only tuition fees are allowed to be deducted, and not donations, development fees, etc. These deductions will decrease your taxable income, especially in urban areas where school fees are quite high.

Look At Your EPF Contributions

Your Employees’ Provident Fund contributions get you deductions under Section 80C. You may have already done some investment in the scheme via your employer. Therefore, your tax savings needs are that much lower on account of investments already done.

You Get Tax Cuts For Charity

Under Section 80G, you get deductions for donations made to eligible charities. Your deductions are subject to restrictions. They could be 50% or 100% of the donation without limit, or they could be 50% or 100% of up to 10% of your gross adjusted total income. In order to claim deductions, remember to collect your donation receipt from the charitable institution. 

Pay Rent, Save Tax

Lastly, you can earn a tax deduction for rent paid if you’re a salaried individual. The deduction you claim is the least of the following: total House Rent Allowance received, rent paid less 10% of basic salary and dearness allowance, and 40% of your basic salary and dearness allowance in non-metros, or 50% in metros. Remember to collect rent receipts from your landlord.

There may be additional deductions and even several tax allowances you may be eligible for, and this isn’t an exhaustive list of them. So do read up on the various exemptions available to you and make full use of them to save your hard-earned money.

The writer is CEO,, an online marketplace for loans, credit cards, and more.

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