What are the usually missed tax-saving opportunities? 3 experts give insights
tax savings methods like tax saving bonds, ELSS, etc. But what about lesser famous options to save the pennies in your pocket? “Investing (in tax savings options) is only one part of sound tax management. However, the important part that doesn’t receive due attention is how you manage your spending," says Sujit Bangar, Founder Taxbuddy.
Income tax laws allow for several deductions from your taxable income for certain expenditures that you make. An example is the payment of children’s tuition fees, health insurance premiums, repayment of home loans, education loans, and house rent are expenses that qualify for a tax deduction. “Unfortunately, many taxpayers are not aware or don’t put in the time to understand these aspects of tax management, and they end up paying tens of thousands of their money in taxes, which they could have saved easily," points out Bangar.
People often assume that tax saving is only about investing money in tax-saving products. It happens because much of the marketing effort goes into attracting your attention to products like ELSS, tax-saving fixed deposits, insurance policies, etc. Coming back to the topic, rent is often a substantial portion of total expenses for many people.
The income tax law allows a tax exemption for this expense under different scenarios. One such overlooked opportunity lies in pension. “Additional tax benefit available to NPS (National Pension Scheme) under section 80 CCD (IB) to the tune of ₹50,000 seems to be underutilised," says Shaily Gang, Head – Products, Tata Asset Management. Salaried individuals under the NPS Corporate model also get a tax benefit on account of employers' contribution to NPS up to 10% Basic + DA of the employee.
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