Top 4 things you must know about taxes (if you would like to pay less)

Saving taxes every year requires timely planning and systematic approach. Before you begin to save tax, you should know these 4 basic points about saving on income tax

If you pay house rent then you can use it to save tax

Many a times, we are all confused with tax calculations on House Rent Allowance(HRA) and tax benefits on home loan. Planning your HRA can go a long way in your financial planning. HRA forms part of the salary you receive from your employer and is subtracted from your gross income.

Lowest of three is deducted:

Actual HRA provided by the employer

      

      50% of basic plus dearness allowance if situated in Delhi, Mumbai, Chennai or Kolkata, 

      otherwise 40% basic plus DA

     

      Actual house rent paid, minus 10% of basic + DA

Make sure you take rent receipts from your house owner.

You can save tax and grow wealth at the same time

Certain tax saving mutual funds such as ELSS funds, EPF, PPF, NSC etc made in accordance with section 80C of the Income Tax Act give tax rebate. No tax has to be paid at the time of investing, earning and redemption, subject to a maximum limit as prescribed under section. Know more

Some expenses are tax deductible

There are certain personal expense allowances provided by your employer which are eligible for exemption from tax. Some of them are:

Medical expenses including preventive health check ups

Medical Insurance Premium

Education loan interest

Housing Loan interest and Principal

Life Insurance Premium

Dependents Healthcare

Doing good can save your taxes too

Donating to a charitable cause can help you save tax. Section 80 G of the income tax act  allows you to deduct up to 10% of your adjusted gross income by donating to certain charities.