We all wish to save some money here and there and many of us try really hard for it and why not it’s our hard-earned money. Nobody wants their money to lessen or go down in value. We all want that we can save our money and then use it in some way that will yield more money but for that, the first thing that comes into our mind is to save money.
We all have had a thought of getting a CA for income tax because the people who have the access to these services go out and tell others that they are saving money. At first, you may think that they are doing something fishy or illegal but you will be astounded by the fact that it is legal.
There are numerous ways in which we can save money legally while filing for personal income tax returns. These savings are provided by the government with some conditions and today we will be providing you with the knowledge because we know that not everyone can afford a CA for income tax.
For instance, if you own a business then the savings that we are going to tell you won’t be applying to you directly because you can take the benefit of your business to save tax further. A CA for small business is often not compulsory but is necessary to save valuable money that can be in turn used to provide money to the business itself. This can be the best investment from you for your business.
There are lots of things that we don’t know about the tax returns in our country. The law is changed every year, new changes often take time to be implemented and the knowledge is very limited. We don’t know how these changes will affect our lives and most importantly our business. There may be some amendments that will affect the way you do business and this needs to be taken into account.
Changes such as these disrupt the integrity of a business and have the ability to take your business from profit to loss. Hence a CA for small business is a necessity whether you understand it or not. If you are having this thought that you are paying a lot of tax as a business then you should reconsider your tax planning.
For personal savings in tax, there are numerous benefits provided by the government itself in the form of deductions which will help you save tax on your money spent. Although for the deductions to be applicable you need to claim these deductions which is a simple process but can get complicated if not taken care of. A need for CA for income tax can arise at this time.
One way to not spend a huge sum of money in getting the services of a CA is to consider our CA for income tax service which will provide you with the guidance to save tax. This guidance doesn’t cost as much as you may think of. The only thing is to give it a try and stop wasting your time and energy worrying about saving money. Just take some guidance and follow your heart.
7 Tips and Tricks to Save Money on Tax
- Deductions under the Section 80C, Section 80 CCC and Section 80CCD
These are the most commonly known deductions available for taxpayers. There are several instruments that come under these sections. For an overview, if you have invested money in the instruments under these 3 sections then you can claim the deductions available for each one of them.
However, the deductions available vary accordingly. The popular instruments that come under this section are PPF funds, pension plans, life insurance policy, fixed 5-year tax-saving deposit, and many more. You know the best of your potential by saving your money in tax deductions. You will need a CA for managing your income tax portfolio.
The limitation is that the citizen can claim up to only a combined of Rs. 1.5 Lakh under all these three sections. For exceptions, people who invest in the National Pension Scheme can claim an additional deduction of Rs. 50 Thousand under Section 80CCD.
These are often the best deductions known to save money on tax as this depends on your portfolio. How you manage your money and how well is it distributed among the various funds and schemes that are encouraged by the government itself. It not only saves you money but also prepares you for any unforeseen circumstance that comes your way.
If you are investing money in a pension scheme in order to save tax then that will eventually help you when you start getting a pension. Diversifying your portfolio considering this will be one of the best decisions that you will be taking. So, don’t miss this opportunity and get the benefits that await you.
- Medical Expenses
Medical expenses are the ones that are uninvited and can come to haunt anyone. Taxpayers get the benefit and can save tax on the amount that they have to spend on medical treatments. This should not come out to be a great decision as this is a basic necessity for all citizens. Although the government should aim at providing free health care services rather than just providing tax benefits on it it still is a good decision.
If you are an employee and your employer provides a medical allowance then you can get your bills reduced using the deductions. The maximum amount that can be claimed on medical bills in a year is Rs.15,000. These deductions come under the act of Section 80D, Section 80DD and Section 80DDB which allows taxpayers to claim deduction on insuring their own health or their family’s health.
The deductions available in these vary accordingly and depends on the type of insurance policy the taxpayers have purchased. You may require CA for income tax deductions in the medical expenses. You may not be able to know all the benefits and losses associated with all these sections and hence a bit of advice will be invaluable.
- Mutual Funds and Shares
You can actually save money if you invest in mutual funds and stock market shares. This is one of the best benefits for people who earn well. It provides an option to invest in shares and mutual funds which provides you with numerous benefits but also the tax on these can be claimed too. This is the reason why mutual funds are one of the best marketing investment strategies.
This comes under Section 80CCG of the Income Tax Act which allows citizens below the Rs. 12 Lakhs annual salary to get an additional deduction. However, it is applicable only to the few specified mutual funds and company shares. It is to encourage new investors to invest in the market with low risk.
- Long Term Capital Gains
The long term capital gain is one of the most utilized tax benefits by business people. Taxpayers can save money on tax through their long-term capital gains provided that they receive the amount by selling off any long-term asset and further investing it in specific instruments to actually gain the benefits.
A long term asset can be an asset that the taxpayer has owned over a period of 3 years. For getting benefits from this investment strategy you will need patience as you have to at least own the asset for 3 years time. As the name suggests the long-term capital gains and hence you will be required to devise a long term strategy either yourself or with the help of a CA for benefiting from income tax.
This tax benefit is best utilized by businessmen and for that to happen you should consider CA for small business service. They can provide you with invaluable insights into the whole strategy and it can be difficult for anyone to devise a strategy for 5-10 years. This is the region where the need for CA arises and you can’t ignore this fact. It will be beneficial for you if you don’t spend your time and effort worrying and get it together and make a plan with the help of a CA because you can afford them too.
- Sale of Equity Shares
This move from the government is to motivate people to invest in equity shares and mutual funds. This results in the flow of money in the market which helps the economy. For this to happen the government has exempted tax on long term gain from the sale of equity shares.
Although the tax is exempted only if people hold the shares for more than a year. This is one of the best tax benefits as this encourages people to invest in shares but also get the benefit without paying much tax on it. If invested carefully then this can result in a lot of profit for a salaried taxpayer.
- House Rent Allowance
House rent allowance is a saving grace for many employees in the country. House rent allowance is given by the employer and is deducted from the employee’s salary. This enables people to save money on the taxes by claiming it under the deductions section.
This is a basic addition to the deductions that you can claim and is pretty handy although you cannot claim the whole house rent allowance amount. There are restrictions on that based on your salary.
If your total rent is more than 1 Lakh a year then you will be required to provide proof of the same in form of the PAN card of the house owner and lease agreement. If you use the house allowance from your employer then it is a must-have deduction that will lessen your burden a bit and the best use of this deduction is in knowing whether to use the house allowance or buy yourself a house.
This decision needs a lot of thought process and will be incomplete without a CA for income tax benefits. You will get to know whether it is beneficial for you to have a house yourself or just use the house allowance by the employer. The duration is the key here and your CA will let you know how well you can plan out your own house. It can be a step towards getting your own dream house in a few years.
- LTA (Leave Travel Allowance)
A lot of employers provide Leave Travel Allowance to their employees which they can use to take advantage of their leave period and travel in the country. These allowances are tax-free and can be claimed by an employee 2 times in a period of 4 years. The condition to claim it is to travel anywhere within the country during the leave period.
This is one of the most useful tax benefits as it will allow you to travel and save money too. Tax benefit on such allowance encourages the citizens to travel and provide some boost to the travel industry.
These are some of the tips and tricks to save money on the personal IT returns and if taken into account all of these deductions and allowance and planning it well, the amount that you will end up saving will look huge. Although it is advised to not try to save money by not paying tax as this will be all accounted for as the black money which will lead you to a dark future only.
You can use our CA for income tax service to figure out the best investment strategy and plan the future expenditure to maximize your tax benefits. You will be astounded after knowing that a little investment can save you a ton of money.
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