While most people are familiar with standard tax-saving methods like investing in PPF, ELSS or claiming deductions under Section 80C, there are a few lesser-known and unusual strategies that can help you save on your income tax.
Here are eight unconventional but effective ways to reduce your tax burden and maximise your savings.
1) Pay Rent To Your Parents And Claim HRA
Living with your parents in a house they own? You can pay them rent and claim House Rent Allowance (HRA) as a deduction under Section 10(13A). Just ensure you have a formal rent agreement and your parents report the income on their tax return. This is a great way to save taxes while contributing to your family’s finances.
2) Buy Health Insurance For Senior Citizen Parents
Section 80D of the Income Tax Act allows you to claim a tax deduction of up to Rs 25,000 annually on health insurance premiums. For senior citizens, this limit rises to Rs 50,000. Additionally, you can claim an extra Rs 5,000 for preventive health check-ups. This benefit covers health insurance for yourself, your spouse, parents and dependent children.
The tax deduction is further broken down as follows — if you are below 60 years and have parents above 60 years, you can claim a deduction of Rs 25,000 for yourself and your family and Rs 50,000 for your parents, totalling a maximum deduction of Rs 75,000. If both you and your parents are above 60 years, the maximum deduction increases to Rs 1,00,000, with Rs 50,000 for self and family, Rs 50,000 for parents.
3) Education Loan Interest, Even For Your Family Members
You can claim a deduction for interest paid on an education loan under Section 80E, even if you are not the student. This means you can take loans for your self, spouse or children or for a student for whom you are a legal guardian, and still claim deductions. This is an excellent way to support your family and save on tax.
