08 TAX SAVING METHODS THAT WILL LEAVE YOU SURPRISED!

When it is that “tax filing” time of the year again, you are reminded of the ways to save tax. And each time you tell yourself, I’ll do this next time! But you are stuck in a loop and you keep repeating the same cycle.?

We are here to help you with some unusual ways that can help you save tax in India.?

Keep reading to know more about this:?

1. Invest through your parents

If your parents are senior citizens, then they are eligible for tax breaks and extended limits. And if their post-retirement income falls under a lower tax slab than yours, then you can invest in their names and gift it to them.

2. Make more contributions to the National Pension Scheme

Although the annual contribution to the National Pension Scheme? under section 80C has a cap of INR 1.5-lakhs, you can get an additional INR 50,000 by telling your employer that you are investing the additional sum in NPS (Tier-I) and this qualifies to be tax-free under section 80CCD (1B).

3. Pay for your parents' health insurance.

You can claim a deduction of up to INR 25,000 under Section 80D of the IT Act for paying for your own health insurance premiums as well as those of your family members. Additionally, you can claim a tax deduction u/s 80D if you pay the medical insurance premiums for your parents.

4. Make donations to social causes.

Section 80G of the IT Act lets you make donations to specified charities or organisations to fulfil your social duties; these help you avail 50-100% tax exemption for the donated amount. The government has set up a few funds that can help you get a 100% exemption. You can check the IT Department website to find a complete list of charities under exempted institutions.

5. Pay your rent to parents and claim HRA.

You can pay the rent to your parents, which will be added to their income and make you eligible for the HRA deduction. You can ensure your parents' financial independence by ensuring a stable income for them.

6. Profit from your gains and reinvest it.

Long term capital gains (LTCG) rules apply if your profits on sale/redemption/maturity of such long-term assets are over INR 1 Lac in that year. You must annually book profits in smaller amounts and reinvest the same in fresh investments to save LTCG tax.

7. Establish a set-off for capital losses.

Losses can be offset against capital gains made in subsequent years when a capital asset is sold at a loss. Losses from capital gains will vary depending on whether the acquisition cost was indexed, or the fair market value was determined, as well as additions, improvements, renovations, constructions, registrations, etc.

But remember that setting off of capital losses is only allowed against capital gains, not any income head. The carry-forward of these losses is permissible up to 8-assessment years, so make sure you always show your capital losses in the ITR.

8. Give your children a gift or a loan.

If your children have attained adulthood, then you can gift or loan them your investments (the ones that come from your extra income or capital gains). When your children earn interest, capital gains or dividends through these investments, they will fall under a lower tax bracket than you. Thus, as a family you can save? a considerable tax amount.

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