They say that the best things in life are free, but the government will soon find a way to tax them. Tax is probably a word everyone dreads. But, there is a tax on everything. From the things you wear to the things you eat, everything is taxable. But the worst of it all is the income tax.
The government charges up to 30 per cent income tax based on how much you earn. This is why a lot of people in the country are looking for ways to save themselves from hefty taxes. And, there are many ways to do so… not illegally, but legally, which are discussed here today.
1. Join government schemes
The first thing you need to understand about income tax is that tax of the first one per cent of the income you make is levied if you are part of the pension fund or the social security fund. Contributing to the Employees Provident Fund and Citizen Investment Trust also helps get rid of heavy income taxes legally. If you deposit a total of Rs 300,000 combined into these two schemes, you are liable to an exemption. So if you are not, make sure you are a part of this because you save both money and tax this way.
2. Buy insurance packages
Buying an insurance package is also another way to get away from the heavy tax duty. One is liable for an exemption if s/he buys life insurance up to Rs 40,000 a year. This will lower the taxable amount and tax liability. This also becomes savings in the long run. The government also offers an exemption of up to Rs 20,000 if the person buys health insurance. The government also exempts Rs 5,000 from the taxable income if a person also has house insurance in their name.
3. Claim exemptions for medicinal expenses
A person can also claim income tax exemptions for medicinal expenses. The government says a person can claim 15 per cent or up to Rs 750 of the amount spent on medical expenses. For this, the person has to submit their medical bill at their workplace.
4. Work in remote areas
The government has divided Nepal’s districts into rural and urban and the tax brackets for these areas are different too. If a person is working in rural areas, they are eligible for a remote area allowance of up to Rs 50,000 which is untaxable.
5. Rebate for diplomatic missions
Nepali officials working in diplomatic missions abroad are eligible for a 75 per cent rebate of the extra allowance they receive while working there.
6. If you are a single woman
For single women who only have one source of income, the government has a provision to waive 10 per cent of the tax they have to pay. For example, if you are a woman who has to pay Rs 10,000 in tax per year, the government will waive Rs 1,000.