Five ways to reduce tax

Last Updated at: Nov 04, 2019
5 Ways to reduce taxes

Tax liabilities are a major amount that is deducted from a person’s income. Whatever be the amount, it will be beneficial to the individual paying to the same only to some extent. Usually, the amount to be paid as tax liabilities will vary from one person to another based on the income that he or she earns.

A guide to reduce your tax liabilities

The tax liabilities contribute to a major chunk of outgoing cash flow and saving it to whatever amount possible would benefit the individual to a certain extent. The liabilities usually differ from each and every individual’s income. This article will discuss the major ways an individual can save on.

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  • House rent allowance

So everyone who is on a monthly salary will be having a salary which can be split into basic salary and house rent allowance. The ratio in which the split up has been devised can always be the trick in saving the amount that has to be paid as taxes. Various factors like whether you are staying in your own house or you are staying in a rented house. Whether you are getting the HRA less than 50 percent or whether your HRA is higher or lesser than the rent. It all depends upon the negotiation ability that a person has with his boss. The ability of a person to convince his salary payer to change the breakup in the salary pay will have the highest effect on the taxability.

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  • Investments

Using tax saving investments is a viable idea. The tax amount can be reduced based on the investment types. Specifically, there are investments such as tax saving mutual fund which is a great way to block the outflow of cash as a tax. The trick also involves in deciding the best way in accordance with your age. Using Public Provident Fund or bonds as an investment option when you cross the middle age will always be a helpful factor to decide in the procedure to save tax.

  • Gifting

Gifting is a great way to save the cash on taxation. The Indian Tax laws permit anyone who has the cash to gift it to his/her child who is a major. This gift does not attract the gift tax. If the income of your major child does not attract the tax liability, then he/she is in no need to worry about it.

  • Education loan

Education loan is another area which can be shown as evidence to reduce the tax. Education expense is one of the huge expenses, one comes across in their lifetime, so it is the most absolute idea to intelligently save on tax liability. It can be stated that the tuition fees can also be included in the tax saving format.

  • Medical expense

The medical expense is another area which occurs anytime to any person. The medical expenses can be another good area to save the tax liability. The health insurance premium which is paid for the person himself or to their child or spouse is also taken into consideration.


These are all easy steps that require you to maintain the documents intact to for reducing the liability. These are some of the common steps that people adopt to reduce tax. Even though these methods are suggested here, it is best advised to seek a professional’s help which would help a person in a getting a proper and perfect advise.

If you were wondering how the tax liabilities are calculated, then you would have got an idea about the same from here. Do remember that you can save on the same by making some investments. Next time you have to file for income tax returns, you should have all the documents intact so that your tax liability is reduced.