- Date : 30/09/2023
- Read: 2 mins
Looking for ways to save on income tax? Rent to your mom and invest in NPS. This article explains how you can save considerably on taxes.
Are you tired of paying high taxes? Do you want to know how to maximise savings on your income tax? Look no further! By taking advantage of house rent allowance (HRA) exemption, National Pension System (NPS) benefits, Leave Travel Allowance (LTA), and medical insurance, you can significantly reduce your income tax outgo. In this article, we’ll show you how to maximise your tax savings by renting to your mother investing in NPS and more.
- Claim available deductions to reduce tax outgo.
- Optimise taxes with tax-free allowances.
- Contribute to NPS and medical insurance.
To reduce taxes, the taxpayer can: claim HRA exemption by paying rent to their mother (if she owns the house), utilise NPS benefits from their company, invest in NPS for long-term tax savings, optimise tax-free perks like telephone allowance and meal coupons, utilise LTA for extra tax savings, and purchase health insurance for their family. The mother pays no taxes if her income is up to Rs. 3 lakhs; a 5% tax applies on income between Rs. 3 lakhs and Rs. 6 lakhs.
To reduce your tax outgo, make sure to claim all available deductions. You can also optimise your taxes by asking your company for tax-free allowances like LTA and purchasing medical insurance for your family. Here’s a table that compares the salary breakdown (existing and proposed) of a taxpayer living in a metropolitan city with a CTC of just over Rs. 1,200,000:
Table below shows tax savings from proposed salary structure.
As is clear from the above table, by adopting the proposed salary structure, the taxpayer’s saving increase significantly.
Disclaimer: This article is intended for general information purposes only and should not be construed as investment or tax advice.
Click here for latest articles on tax-planning