7 ways in which taxpayers can reduce their tax liability

7 ways in which taxpayers can reduce their tax liability

Nobody enjoys paying taxes in this world. There is no way to avoid paying taxes if you have taxable income. However, effective planning from the start of the fiscal year might help you lower your tax liability.

Income tax rules in India have exempted certain expenses and investments from taxation, or if you make certain investments or incur certain expenses, you may be entitled to tax deductions and exemptions. As a result, such investments and expenses can help you minimise your tax liability.

Income tax rules in India have exempted certain expenses and investments from taxation, or if you make certain investments or incur certain expenses, you may be entitled to tax deductions and exemptions.

Here are seven strategies for lowering your tax bill:
1. Premium payments for life insurance, pension plans, and provident funds

Individuals can deduct up to Rs 1.50 lakh in payments for life insurance premiums, provident fund, PPF, investment in ELSS schemes, tuition fees paid for up to two children, National Savings Certificate, home loan principal repayment, and so on under Section 80C of the Income Tax Act 1961.

Section 80CCC allows you to deduct premiums paid for annuity and pension plans offered by insurance firms. Similarly, deductions can be claimed on investments made in the Central Government’s pension system under Section 80 CCD (1).

However, the total deduction for all three components combined cannot exceed Rs 1.50 lakh.

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2. Contribution to the National Pension System (NPS)

An extra deduction of up to Rs 50,000 can be claimed on NPS contributions made by employees under Section 80 CCD (1B). This is in addition to the investment made according to Section 80CCD (1).

A deduction for an employer’s NPS contribution can be claimed under Section 80 CCD2. However, the size of the tax benefit will be determined by the type of employer.

-The deduction limit is 10% of the basic wage plus dearness allowance if the employer is a PSU, state government, or any other private sector enterprise (DA).

If your employer is the federal government, you can deduct up to 14% of your basic salary plus DA.

GST exemption items: Govt sets up ministerial panels to review tax slabs 

3. Rental property income

An individual can claim a tax deduction of up to Rs 2 lakh on interest payments on a house loan or home improvement loan on a self-occupied property under Section 24(b). However, payments made toward the principal of a house loan can be claimed under Section 80C up to a maximum of Rs 1.50 lakh.

You cannot, however, claim this tax benefit if you have chosen the new tax regime.

4. Premium payment for health insurance

A deduction can be claimed under Section 80 D for premiums paid for health insurance for self and dependent family members, as well as for preventative health check-ups. However, there are certain limitations:

Section 80D allows a deduction of Rs 25,000 for self/spouse, dependent children, or patents. This deduction might be up to Rs 50,000 if the claimant or any family members are senior people. Only a Rs 5000 deduction is allowed under Section 80D for preventive health examinations.

Medical expenses incurred by a senior citizen can also be deducted up to Rs 50,000 under Section 80D.

5. Expenses for the care and treatment of a dependent who is impaired

Expenses for the maintenance or medical care of a disabled dependent can be deducted up to Rs 75,000. However, if you have a severe disability (80% or more), you may be eligible for a reduction of up to Rs 1.25 lakh.

6. Medical treatment reimbursement

A deduction of up to Rs 40,000 can be claimed under Section 80 DD (1B) for medical expenditures incurred by self and dependent family members for specified diseases. If one of the family members is a senior citizen, the deduction limit would be increased to Rs 1 lakh.

7. The amount of interest paid on a student loan

An individual can deduct interest paid on an education loan taken for the higher education of a dependent child or spouse under Section 80E. It’s worth noting that there’s no maximum limit to this deduction.

Govt’s excise collection jumps 48% in April-July; already 3x of full fiscal oil bond liability

Govt’s excise collection jumps 48% in April-July; already 3x of full fiscal oil bond liability

Official data revealed that the government’s revenue from the levy of excise duty on petroleum products increased by 48% in the first four months of the current fiscal year, with the incremental mop-up being three times the payback burden of legacy oil bonds for the entire fiscal year.

Excise duty collections increased to over Rs 1 lakh crore in April-July 2021, according to data from the Union Ministry of Finance’s Controller General of Accounts, up from Rs 67,895 crore in the previous fiscal.

Only petrol, diesel, ATF, and natural gas are subject to excise duty since the implementation of the Goods and Services Tax (GST) regime. All other goods and services, with the exception of these, are subject to the GST.

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The government’s incremental collections of Rs 32,492 crore in the first four months of the fiscal year 2021-22 (April 2021 to March 2022) are more than three times the Rs 10,000 crore liability it has for the entire year to repay oil bonds issued by the previous Congress-led UPA government to subsidise fuel.

The bulk of excise tax revenue comes from the levy on gasoline and diesel, and with sales going up as the economy improves, industry insiders estimate that incremental receipts in the current fiscal year might be over Rs 1 lakh crore higher than the previous year.

In total, the UPA government issued Rs 1.34 lakh crore in bonds (similar to a sovereign promise to pay in the future) to state-owned oil corporations to compensate them for selling fuels such as cooking gas LPG, kerosene, and diesel at below-cost prices.

According to the finance ministry, Rs 10,000 crore is due to be reimbursed in the current fiscal year.

The Finance Ministry distributes Rs 13,386 crore to 25 states as an RLB award.

Finance Minister Nirmala Sitharaman and then-Oil Minister Hardeep Singh Puri both criticised the oil bonds for limiting budgetary capacity to provide relief to people suffering from near-record-high fuel costs.

Last month, Sitharaman rejected out a reduction in excise duty on gasoline and diesel to lower prices, citing the restrictions of payments in lieu of previously subsidised fuel. She estimated the BJP government’s overall obligation to be Rs 1.3 lakh crore.

The bulk of the excise collections comes from petrol and diesel on which the Modi government had levied record taxes last year.

Last year, excise duty on petrol was raised from Rs 19.98 to Rs 32.9 per litre to recoup gains from international oil prices plummeting to multi-year lows due to decreasing demand.

CBDT refunds Rs 67,401 crore to over 23.99 lakh taxpayers between April 1 to August 16

CBDT refunds Rs 67,401 crore to over 23.99 lakh taxpayers between April 1 to August 16

Between April 1 and August 16, the Central Board of Direct Taxes awarded refunds totalling Rs 67,401 crore to over 23.99 lakh Indian taxpayers, according to the Income Tax Department of India.

Income tax refunds totalling Rs 16,373 crore have been issued in 22,61,918 cases, while corporate tax refunds totalling Rs 51,029 crore have been awarded in 1,37,327 cases, according to the I-T Department.

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“Between April 1 and August 30, 2021, the CBDT issues refunds of over Rs. 67,401 crore to over 23.99 lakh taxpayers. In 22,61,918 cases, income tax refunds of Rs 16,373 crore were provided, while corporate tax refunds of Rs 51,029 crore were issued in 1,37,327 cases “India’s Income Tax Department sent out a tweet.

 

Between April 1 and August 16, the agency claimed it has provided income tax refunds totaling Rs 49,696 crore to more than 22.75 lakh people.

 The Central Board of Direct Taxes deals with matters related to levying and collecting Direct Taxes and formulation of various policies related to direct taxes.

CBDT is a part of Department of Revenue in the Ministry of Finance. They provides inputs for policy and planning of direct taxes in India, and is also responsible for administration of direct tax laws through the IT Department.

The Central Board of Direct Taxes is a statutory authority functioning under the Central Board of Revenue Act, 1963. The officials of the Board in their ex-officio capacity also function as a Division of the Ministry dealing with matters relating to levy and collection of direct taxes. Historical Background of C.B.D.T

 

The Central Board of Direct Taxes issued refunds of over Rs 67,401 crore to over 23.99 lakh Indian taxpayers between April 1 and August 16, the Income Tax Department of India said on Saturday. 

The I-T Department also stated that income tax refunds totaling Rs 16,373 crore were issued in 22,61,918 cases, while corporate tax refunds totaling Rs 51,029 crore were issued in 1,37,327 cases.