There isn’t a year that goes by during which most of us try our very best to save on tax. After all, who really wants to pay taxes anyway? It’s just one of those things that we can’t escape, unfortunately, so we try and make the most of it.
While we usually go down the usual tax-saving routes by making Investments or purchasing Insurance Policies like they’re going out of style, we tend to overlook some other avenues through which we can save on tax.
Additional Reading: Investment Tips To Save Income Tax
If you’re looking for other ways to save tax, then check out some of these 5 commonly overlooked and underrated ways you could actually do so in 2017.
Education Loans
If you’ve promised yourself that you’d do something of note this year, other than getting wasted every weekend and racking up your Credit Card bill, then an Education Loan could be just what you need to not only enhance your knowledge and keep yourself ahead of the game professionally, but it can also be a fantastic way to save on tax as well.
The interest you pay on your Education Loan can be claimed as a tax deduction according to Section 80E of the Income Tax Act. Remember, this applies only to the interest part of the loan and not the principal part.
However, it is imperative that you make your loan repayments regularly and consistently, since defaulting on your Education Loan could severely affect your credit history and Credit Score, making it that much more difficult for you to acquire loans in the future, should the need arise.
Additional Reading: Here Is All You Need To Know About Calculating Your Taxable Income
Charity
Maybe, just maybe, we could make 2017 the year we actually start thinking about making a difference to someone less fortunate. If you happen to have an abundance of money, then there can be no better way to put it to good use than by donating to charity.
In fact, by doing so, you even get to save on tax since any donations made towards recognised charitable organisations or funds attract tax exemptions under Section 80G of the Income Tax Act.
Donations made to institutions like the Army Central Welfare Fund, the National Culture Fund, the National Illness Assistance Fund etc. are eligible for 100% tax deduction.
Just make sure you acquire a stamped receipt from the trust in order to claim tax deductions. This is absolutely mandatory if you’re looking to save on tax via this route.
Additional Reading: 5 Ways You Can Give Even When You Receive
Rent To Your Parents
Here’s a great way to save on tax. In India, many of us still live with our parents, right through adulthood. While this has obvious advantages, like eating scrumptious home-cooked meals every single day, it also has tax-saving benefits.
If you happen to stay with your parents, but the house is in the name of your parents, you can actually pay rent to them and claim House Rent Allowance (HRA) on the amount you pay as rent. Just make sure that you get rent receipts every month from your parents to submit as proof (and their PAN if the amount paid exceeds Rs. 1 lakh per annum).
Additional Reading: 5 Things You Ought To Know About HRA
Travel
Travelling is awesome. There are no two ways about it. Whether it’s a long vacation or a short road trip, nothing beats heading out into the sunset without a care in the world.
But, did you know that you could travel AND save on tax as well? Yup, that’s right. If you happen to be self-employed or run your own business, you could deduct your travel expenses against the income you earn and only pay tax on the leftover profit you make.
And, if you happen to be employed, then you’re in luck. The Leave Travel Allowance (LTA) that your employer offers you when you travel with your family or by yourself is completely tax-free.
While submitting proof of your travel is not mandatory, sometimes, your company or tax authorities might insist on it when assessing your claim. So, make sure you keep all your flight tickets, boarding passes, train tickets or any other relevant proof handy just in case.
Additional Reading: How To Cut Down Your Expenses, Save More And Travel A Lot
Equity Funds
While investing in Mutual Funds is nothing new, there is a way your returns can be completely tax exempt. By investing in equity funds, you won’t have to pay capital gains tax if you sell your fund a year after you initially purchased it.
Any returns you receive from the sale of equity funds after a year are tax-free. Many people tend to overlook this particular tax-saving avenue, but it could certainly give your quest to save on tax this year a fillip.
Additional Reading: Introduction To Equity Mutual Funds
There you have it. If you have overlooked any of these tax-saving avenues in the past, then make sure you take these into consideration from now on.