Though taxes are difficult to avoid, there are numerous strategies to help ward them off. To get clear insights into tax saving, you need to understand tax slabs too.
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Paying taxes on hard-earned income is challenging at the end of the financial year for each of us. Our income gets taxed in several ways: at the state and federal levels, by Medicare, and social security, to name a few. Even there is a lot of hustle-bustle at the time of submitting various insurance forms and rent receipts. But if you want, you can save yourself from unnecessary financial stress and can save a good amount on taxes.
Though taxes are difficult to avoid, there are numerous strategies to help ward them off. To get clear insights into tax saving, you need to understand tax slabs too. If you are also looking for tax-saving options, then you can invest your finance and can use it as a saving instrument in the future as well. Furthermore, you can also use different allowances to save taxes. Here are the following ways to protect your income from taxes. Let’s dive in!Ways to save on your income taxes
This is not an exhaustive list, but has all the major exemptions. Many other exemptions are eligible in various special situations. As you can see, a lot of these exemptions have limits to cover only your basic needs and expenses. Knowing and understanding these allowances and exemptions is the first step while optimizing your finances.Contribute to the National Pension System (NPS)
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One of the best ways to save tax is nothing but contributing some amount to NPS. There is a deduction available under Section 80CCD up to Rs 50,000 for contributions to the NPS. This contribution helps you to invest in equity and debt pension funds so that you can build a retirement corpus. Later this amount can be withdrawn at the age of 60.
Get deduction on interest paid on your home loan
Your home loan can also save a bit amount for you. If you have a home loan and the interest payable on it is tax-deductible which comes under Section 24 of the Income Tax Act, then up to Rs 2 lakh per annum amount can come under deductions. But if you receive the house rent from that property, there is no upper limit. However, this total loss can be claimed in the head of income from house property which is decided up to Rs 2 lakh.
Secure some amount for future
One of the easiest ways to save your money is nothing but the following deduction under the Income Tax Act that any individual can claim. Interest received on savings accounts is tax-free up to Rs 10,000 per year which falls under Section 80TTA. This limit is decided by Rs 50,000 for senior citizens for FD as well as savings account interest that falls under Section 80TTB.
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