At the end of every financial year, those who pay taxes look for last minute investment options to save tax. The Income Tax Act offers many incentives and allowances, apart from the popular 80C, to reduce tax liability. Here we list out seven smart tips to help you save more and also reduce taxes.

1. Have a separate independent income-tax file for every member in the family:

The objective of this is to achieve tax planning and cut down on your income-tax payments. The concept of giving a loan to your spouse or a gift to your children will help you diversify and reduce tax liabilities. However, you need to be aware of the fact that your wife can receive gift from any relative other than her husband, father-in-law and her mother-in-law. To take a loan with reasonable interest from anyone, including your spouse is permissible under the law.

2. Utilizing Section 80C:Section 80C offers a maximum deduction of up to Rs 1,50,000. You can take advantage of this section by investing in any of the available investment options. Some of these options can be: Public Provident Fund

Life Insurance Premium

National Savings Certificate

Equity Linked Savings Scheme

5-year fixed deposits with banks and the Post Office

Tuition fees paid for children's education, up to a maximum of 2 children.

3. Investment in gold Exchange Traded Funds (ETF):Gold and silver are still one of the favourite commodities for investors. But it is better to prefer Gold Exchange-Traded Funds (Gold ETFs) over physical gold. Gold ETFs have no risk of theft. Also, there are no worries about storage cost as they are held in demat or in paper form. Moreover, gold ETFs become eligible for long-term capital gains after just one year of investing as compared to three years for physical gold. This is good because short-term capital gains always attract more tax than long-term gains.4. House Rent Allowance:If you are not receiving any housing rent allowance (HRA) from your company then you can claim the following under Section 80GG: 25% of the total income

Rs 2,000 per month

Excess of rent paid over 10% of total income

In case your spouse or child owns a residential accommodation in the location where you reside, then these deductions will not be available for you.For salaried employees who get HRA allowance, the minimum amongst the following three is permitted for tax deductions:

HRA received from employer

The actual rent paid by you, minus 10% of your salary (this includes basic dearness allowance, if any)

50% of your basic salary (for a metro city) or 40% of your basic salary (for non-metro city).

5. Leave Travel Allowance:

For salaried individuals, LTA is available twice in a block of four years. Also, if you do not claim this in that period, you can carry the claim allowance forward. In such a case, you will be eligible for three exemptions in that block.

6. Make use of interest payments:

Interest payments on home loans or education loans under section 80E of the IT Act can be utilized to reach a lower taxable income.

7. Medical expenditure:

Make use of deductions allowed for up to Rs 40,000 spent on treatment of specified diseases suffered by yourself or a dependent relative. These help reduce your total tax liability.