Income Tax is one of the harsh realities that we can’t escape from no matter how much we want. It falls under conveyances that we have to take care of. Especially for start-ups and small businesses, it is very important to know how to save on the payable taxes. In the primary stage of a business, knowing tax loopholes can save you a lot of money.

What is the Income Tax?

Income Tax is a portion of your income that you pay to the government directly. It is the tax collected on an annual basis where the authorities use this money to perform administrative tasks.

There is a host of ways of saving tax under the Income Tax Act, 1961. In this article, we cover all the major tax deductions under the Income Tax Act:

1. Hire Your Own Relatives: Hiring relatives and family members in your own business can help you save taxes big time. By paying Rs. 2, 50,000 annual salaries, your employees cum relatives are relieved from paying their taxes.
2. Travelling and Accommodation: As a business person, you are required to travel frequently. This is actually a great way to relieve some of the tax burdens off your shoulder. So next time if you travel, book your travel and accommodation expenses from the company’s account and not your own.
3. Invest More in Marketing: If you’re investing more in marketing, your business will do better and you will draw more customers in. Also, under some provisions, your marketing expenses will be applicable for tax deductions.
4. Business Utilities: In a business, adding the cost of utilities in your annual budget report will help in saving on taxes. Regular expenses, convenience expenses and preliminary expenses can be a part of it.
5. Medical Insurance: A deduction of up to Rs 25,000 is available for health insurance premiums under Section 80D.
6. Contribute to charity: You can get a tax deduction on your charitable donations. For most of the donations to NGOs, the limit is 50% of the donated amount and up to 10% of your adjusted total income.
7. Housing Loan:  If you have a home loan, the interest payable on it is tax-deductible under Section 24 of the Income Tax Act up to Rs 2 lakh per annum.
8. Depreciation: Manufacturers are given additional tax benefits under Section 35AD.  By installing new machinery in a year can claim up to 20% additional depreciation.

How can we help you?

Apart from regarding all the above tax saving options, consult a professional tax planner from Online Legal India™ to avoid any last-minute trouble while filling your Income Tax Returns. It is crucial to start your tax planning well before 31st March and to file your returns before the 31st of July each year