Taxpayers take reckless investment decisions to reduce taxes, typically towards the end of the financial year. Many of them are not aware of Income Tax provisions that help minimize tax liability. Here’re a few tips that could prove handy:
A salary restructure, if the employer allows, is an effective tool to minimize taxes. You can ask for food coupons instead of availing lunch allowances, as food coupons are tax-exempt up to Rs. 50 a meal. Providing bills for expenses incurred against allowances like education, transport, telephone and medical also cut down tax liability. Where applicable, commuting in a company-provided vehicle also minimizes high prerequisite taxation.
Section 80C provisions
The popular Section 80C provides a deduction of up to Rs. 1,00,000. It includes a comprehensive list of eligible investments like five-year FDs with post office and banks, Equity Linked Savings Scheme, NSC, Life Insurance Premium, Public Provident Fund and Tuition fees for child’s education.
Options beyond 80C
Individuals, who have exhausted their section 80C limit, can avail benefits under Section 80D. The exemption of Rs. 15,000 is towards medical coverage of self, spouse and dependent children. Besides, there’s a tax benefit of Rs. 20,000 against medical insurance of parents aged 65 years or above. Section 80G also allows deductions on donations to eligible charitable institutions.