How to Save Income Tax?

How to Save Income Tax?

Income From House Property

1) Interest benefits on Housing loan: Some people won't housing loans but now it will be beneficial for the taxpayer. From the tax POV, they may claim tax deduction under section 80C but it should not exceed from Rs 1,50,000/-. Gross value for tax purposes is taken as NIL and claiming deduction results in loss under the head ‘Income from house property’ and can be set off against incomes of other heads resulting in lesser overall taxable income. It probably the perfect answer for "How to Save income Tax"??

2) Use cheque for paying municipal taxes: You may claim the tax deduction on the respect of Municipal taxes paid during the year. Often people pay their municipal taxes in cash and they won't keep receipts of the same. Cheque payment may reduce your income burden. Income From Business Or Profession

3) Proper recording of cash expenses: Many businesses in our country they usually do payment in the cash mode and they won't maintain proper record of wages. Factory floor & other indirect wages account for at least 40% of your manufacturing expenses and improper recording of such payments result in higher profits as a consequence of under-recording of expenses, thus resulting in the higher amount of taxes. So proper recording of Cash expenses will be the effective answer of How to Save income Tax

4) Valuation of Stock: The stock which has short shelf life should be valued on the principle of Cost or NRV whichever is lower. Net Realisable Value provides the actual realisable value of stock and hence, prevents the stock from getting overvalued, which ultimately reduces taxes.

5) Source should be the deduction of Tax: There many described transactions under Income Tax Act that only require the buyer to reduce the tax while making payment. If buyer misses then it will be the extra tax burden for the supplier, this sincerity is also a mode of effective mode of saving income tax.

6) Cash payments: Most of the time try to avoid cash payments that will be helpful for Income tax saving. However, rule 6DD of Income Tax Rules provide some exceptions and cases where the section shall not be applicable.

7) Deduct incomes which are taxable in other heads: Indirect incomes such as absorption incomes are added while artful absolute profits. Most humans haven't acquainted that such incomes are taxable beneath added active and may even be absolved in some sections. If not deducted from book profits, one may not even end up paying college taxes but even abort to annual tax allowances available. For example, absorption assets on an accumulation annual are burdened beneath the arch ‘Income from Added Sources’. Also, area 80TTA of Assets Tax Act allows an answer of absorption on accumulation assets up to Rs 10,000/- per year. If such an assets are not deducted from book profits again it will be burdened as any added assets and as well answer beneath area 80TTA will be absent out.

8) On time filling of the Tax return : Income tax department suggests filing income tax return on time to avail many benefits. One of the main benefits is carry forward of losses on business income. Business income losses can be carried forward for a consecutive period of 8 years and hence can be set off against income of next years if the same is not set off against the incomes in the current year. However, the benefits of carrying forward of losses are available only when the income tax return is filed on or before the due date. Therefore, one must keep in mind the dates for prompt and timely filing of income tax returns.

Final Words

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