You are reading the right article if seeking tax benefits. Regular income tax-saving tips are likely to bore you. I am here to share some different, somehow unique, and not-so-well-known tips. These tips will help you in the current year or later.
Continue reading the tips in the article, as this is helpful at all levels.
Imagine you have Rs 25 Lacs. If you put Rs 25 Lacs invested fixed deposit and other financial products; you will receive interest of 8% that will become 2 lakhs. So, you saved taxes on Rs 25 lakhs.
1. Distribute your money among major children
According to the Income Tax Act, if you give money to your larger children, this gift tax will be due, as their money will become your primary income for children, and anything resulting from it will be treated as their income and not your income. However, there are times when you do not feel comfortable giving large sums of money directly to your grandchildren, and in this case, there is the possibility of giving them a loan. In this case, their income is below the threshold and is not taxed.
Note that it is not always possible to do the same with your spouse. If you get married in about a month and have a large amount of cash at your disposal, you can give your spouse a gift to give to the future wife who will be your spouse. Any income you transfer to your spouse is automatically generated as income and treated as your income.
2. Stamp Duty is eligible for tax savings
Many people are unaware that stamp duty and the registration fee for documenting the house in the year of the house purchase can be claimed as a deduction under Section 80C. The critical point is that you must have the property if you want to claim the deduction. In the event of construction financing, you lose out on the claim of this deduction.
3. HRA
As a salaried employee of a company, you can claim this deduction under the HRA.
If you are a self-employed worker working for a company that does not provide you with HRA benefits. Under Section 80GG, you can claim deductions from the rent paid if you do not have HRA. You can do this by invoking Paragraph 80GG.
Not many people are aware of this deduction if you do not pay HRA & do not receive housing benefit from an employer (e.g., Note that if your spouse, minor children, or you do not own a house within the city limits and wish to claim the benefit, you must submit a form called 10-BA, in which you pay to rent and do not receive HRA.)
4. It’s not a bad idea at all to declare your losses
Many people do not report their losses on shares in mutual funds, gold, ETFs, or real estate on their tax returns. This is a big mistake because you are wasting the chance to save taxes in the years to come. You should set your losses and profits for the current year and the future. Suppose, for example, you sell your property and make a profit of 10% on LAC indexing.
If you have a loss on the annual profit, you can include it in your tax return as a carry-over and set it as a future profit for the next 8 years. Suppose you make a loss of Rs 4 Lacs in stocks & your profit of 10 Lacs on selling your real estate, then you should pay tax on Rs 6 Lacs after setting off the loss of Rs. 4 lacs. That’s your fantastic saving of Rs. 80K per the 20% tax rate on sold real estate.
5. Partnership is a real savior
Buying property in co-ownership is a whole different tax-savvy story.
If you are a bachelor or single and want to purchase a house, you should ask your brother, sister, or parents to become joint owners so that you can receive the tax advantages and lower your tax burden. When you take out a home loan, your sibling may be co-owner of the property and co-debtor of the loan (loan amount plus interest and principal) and pay the available tax exemption rate of your loan amount. The only problem is that if the credit sanctions company imposes strict conditions on lending to siblings, there is a high probability that you will have to separate from them in family matters. Still, it will happen much less in the case of spouses. So, if you have your spouse, parents, or siblings as joint owners, they can claim the tax deduction of 1 Lacs for the main part and 1.5 Lacs for the interest part.
6. Education loan of kids can help you to save taxes
You will have the money to pay the education fees for your children. It is advisable to opt for an educational loan in your name so that you can claim the entire interest on the loan under Section 80E. Note that academic credits are only available if you are a parent or legal guardian.
The other thing you can do is take out an educational loan in your children’s name so that they can claim the deduction the year they pay off their loan. As your children are responsible for repaying educational loans out of their pockets, make sure they do not spend too much money in the wrong places so that you can use your money wisely today. One last tax-saving tip that we will discuss.
7. Tax deductions on your second dream home
If you bought the first home in which you have lived and now wish to buy another, the good news is that you can claim total interest on both the houses. Under tax law, you can also claim a full deduction for the amount paid on the interest loan on the home. You can claim 1.5 Lac interest on the first house you bought, and you can claim the total interest rate up to the upper limit on the second house you purchased.
If you are new to any of the above income tax-saving tips, please do so now before anyone else does.
