The people of a country pay taxes to the government based on what they earn. However, if you want to reduce your tax, then there are specific ways in doing so. Tax deductions help taxpayers reduce their tax liability towards the government, enabling them to take home more of their earned money.
"Tax" seems to be a scary term. Since it requires us to give away a part of our hard earned money.
What’s not realised is that the government functions on these taxes that people pay. The many services and amenities that the government provides, the expenses of them are fulfilled via these taxes only. The government also provides a lot of tax saving provisions which are known as tax deductions.
What are tax deductions actually?
Tax deductions help taxpayers reduce their tax liability towards the government, enabling them to take home more of their earned money.
This means, the government offers different types of deductions. These are influenced by certain factors. Also, the amount varies depending on the type of deduction you plan to claim.
These benefits can be claimed on the expenses that you have incurred and on the investments you’ve made.
So, these investments can include:
Now, if you contribute towards certain defined saving schemes, you get a deduction on the total amount of your tax liability. This means, you'll have to pay lesser tax.
Above all, you get dual benefits:
Simply put, tax deductions are available so that more people claim and enjoy social benefits.