Some simple and common tax-saving tips for FY 2022-23.

When you first become eligible to pay taxes, you will face a lot of confusion. Even paying a little portion of your hard-earned money in income tax feels dreadful. Taxes, on the other hand, are necessary for the nation’s development and cannot be avoided. People are always seeking for strategies to save as much money as possible on taxes. No one wants to miss out on opportunities to save money on taxes. Varied people have different preferences when it comes to doing so.

Here are some simple tips to save taxes effectively

Use Section 80C

The central government allows certain deductions on the amount invested in specific instruments under section 80C in order to encourage inhabitants of the country to develop the habit of saving more tax. The following are some of the most common tax-saving strategies:

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  • Pension plans
  • PPF accounts
  • Equity mutual funds
  • 5-year tax-saving deposits
  • Life insurance policies or term plans

Most employers allow you to restructure certain compensation components to reduce your tax burden. Talk to your human resources (HR) department about adding extra allowances to your compensation if you have a good connection with them. Allowances such as medical, transportation, and education allowances, as well as telephone expenditures, can be included in your compensation because they are not taxable. Also, instead of a lunch allowance, opt for food coupons, which are tax-free up to $60,000 a year.

Employees typically receive House Rent Allowance (HRA) as part of their pay. If your compensation does not contain this component. “If you live in a leased home and receive a rent allowance from your company, you can claim HRA exemption as an employee under the Income Tax Act.”

In addition, charitable contributions made under section 80G are tax deductible up to 10% of your income. However, rather than donating without receiving a receipt or a copy of the organization’s income tax exemption certificate, you should request a receipt and a copy of the organization’s income tax exemption certificate.