Save Income Tax On Salary
July 24, 2019
How To Save Income Tax On Salary In India?
There are a lot of genuine methods for saving tax like mutual funds, NPS (National Pension System), protection premiums and numerous others. In this article, we spread all the significant tax derivations under the Income Tax Act:
• Spend your Rs 1.5 lakh limit under Section 80C
The underneath referenced investments or deductions are for the most part subject to a limit of Rs 1.5 lakhs. As such, they are investments and making one sort of investment will decrease the space for another:
• Public Provident Fund: Public Provident Fund or PPF is a government-run investment funds scheme with a term of 15 years available at most banks and postal offices in India. It’s rate changes each quarter yet is as of now 8%. The interest on PPF is tax-exempt.
• Tax-Saver FDs: One can get a tax deduction of up to Rs 1.5 lakhs under 5-year tax saver FDs that carry a fixed rate of interest at present between 7-8%. The interest in these FDs is taxable.
• ELSS Funds: Equity Linked Saving Schemes are mutual funds which contribute at least 80% of their benefits in equity. They have a lock-in of 3 years. The profits on ELSS funds are liable to Long Term Capital Gains Tax (LTCG) at 10%, well beyond an exception, utmost of Rs 1 lakhs.
• Life Insurance Premiums: Premiums for various kinds of insurance policies including ULIPs (Unit Linked Insurance Plan), endowment policies and term insurance are tax deductible to the limit of Rs 1.5 lakhs. Anyway, the insurance cover must be somewhere around 10 times the yearly premium.
• NSC (National Saving Certificate): A National Savings Certificate has a term of 5 years and a set rate of interest. The rate is right now at 8%. The interest on NSC is likewise consequently calculated towards the Rs 1.5 lakhs 80C limit and is tax deductible if no different investments are consuming the limit.
• National Pension System (NPS): NPS deduction is accessible under Section 80CCD up to Rs 1.5 lakhs for commitments to NPS. This is well beyond the Rs 50,000 deduction accessible under Section 80CCD (1B) talked about underneath.
• Home Loan Settlement: Settlement of the principal sum on a home loan is taxable up to Rs 1.5 lakhs per year.
• Payment of tuition fees: Payment of educational cost expenses: Payment of educational cost for your kids is tax deductible up to Rs 1.5 lakhs per year.
• Employees Provident Fund: Under the EPF Act 12% of the monthly salary of employees in an organisation is deducted towards Employees Provident Fund. This deduction tallies towards the Rs 1.5 lakh limit under Section 80C.
• Senior Citizens Savings Scheme: Contribution towards SCSS is taxable up to Rs 1.5 lakhs. SCSS has a term of 5 years and is accessible to those over 60 years old. The rate for SCSS is more than existing FD rates and is right now 8.7% and is taxable.
• Sukanya Samriddhi Yojana: Parents of a girl child under the age of 10 can get a tax deduction from Sukanya Samriddhi Yojana. This record has a term of 21 years or until the small girl gets married at the age of 18. It has an interest above existing rates (as of now 8.5%) and the interest is tax-exempt.
:- BENEFITS OF FILING IT RETURNS
Contribute to the National Pension System
The deduction under Section 80CCD (1B) to Rs 50,000 is accessible for contributions to the NPS. The NPS enables you to put resources into equity and debt pension funds and construct a retirement amount. You can withdraw it at the age of 60.
Pay Health Insurance Premiums
Subtraction up to Rs 25,000 is accessible for medical coverage premiums under Section 80D. This is far beyond the deductions cited above. For senior citizens, this limit point is expanded to Rs 50,000. An individual contributing medical coverage for self and senior citizen guardians can benefit from the consolidated deduction up to Rs 75,000 for per year.
Get rental deduction
You can claim a tax deduction on your House Rent Allowance on the off chance that you get HRA. There is no furthest breaking point for this yet there are a lot of principles that top the maximum HRA conclusion. In case you are not eligible for an HRA, however, pay rent, you can declare a tax deduction under Section 80GG to Rs 60,000 per year.
Get deduction on your home loan interest
In case you have a home loan, the interest to be paid on it is deducted under Section 24 of the Income Tax Act up to Rs 2 lakhs per year. In case you give out the house on lease, there is no maximum breaking point. Anyway, the total loss which can be claimed on the more extensive head of pay from house property is limited at Rs 2 lakhs.
Keep some money in your savings account
This is most likely the most painless deduction under the Income Tax Act that people can guarantee. Interest on bank accounts is tax exempt up to Rs 10,000 every year under Section 80TTA. This limit is restricted at Rs 50,000 for senior citizens for both savings account and fixed deposit interest under Section 80TTB.
Contribute to charity
A tax deduction can be also claimed by donations towards charitable trust. There is no maximum cut-off however different standards confine the tax deduction sum accessible on your contributions towards a charitable trust. For most contributions to NGOs, the farthest limit is half of the donated sum i.e. 50% and up to 10% of your balanced total pay. NGOs under this segment should have an 80G declaration for you to have the capacity to guarantee these deductions.