After the declaration of Budget 2017, many people in the country are still muddled whether the Finance Minister has left them poorer or richer. However, concealed in the tangle of provisions, there are several means and ways that can help you save a chunk of tax. This article is designed to help you minimise the pinch of income tax and increase your take home salary.
Section 80C of Income Tax, the Rs. 1.5 lakh tax-saving window, allows exemption of spending and investment from income tax. But there are many other ways to reduce the burden of income tax and maximise your savings. These methods include some common investments that are mentioned below:
- Provident Fund Contribution
- Education Loan Interest
- Contribution to Unit-Linked Insurance Plans for yourself, your spouse and children.
- Life Insurance premiums for your spouse, children and yourself.
- Home loan interest
- Investing in Public Provident Fund (PPF) account.
- Investing in National Savings Certificates (NSC) plans
- A five-year term deposit with bank
- The investment made in Sukanya Samriddhi Account up to Rs. 1.5 lakh a year, in the name of your daughter
There are several methods apart from Section 80C that help you in tax saving:
1. National Pension System (NPS):
National Pension System (NPS) is a retirement savings scheme that is flexible in nature. The NPS offers both a monthly pension, i.e. a fixed monthly income, and a lump sum amount to an employee after retirement. The contribution by an employee for NPS is deductible up to 10% of salary based on an overall cap of Rs. 1.5 lakh. Also, a supplementary exemption of Rs. 50, 000 is offered if the employee makes any contribution to NPS. Employer’s contribution is also made available for the exemption up to 10% of salary (without any cap).
2. Home Loan Interest:
Another means to save tax is throug0068 home loan. It is an ideal option that does not let you dip into your reserves and helps you save tax. It is a better choice to pick, as there are benefits provided for both repayment of the principal amount and payment of interest, as per the applicable tax laws in the country.
A maximum exemption of Rs. 2 lakh is provided on interest to be paid on home loans under the ‘Income from house property’ head for self-occupied property. At present, there is no limit for let-out property/deemed let-out property. But according to Budget 2017, the FM has proposed to bind the sum of ‘loss from house property’ up to Rs. 2 lakh per annum for both rented houses and deemed to be rented houses. This step would limit the interest amount paid by a person on his home loan that can be claimed by him as a set-off.
3. Education Loan Interest:
There is no limit defined for education loan interest.
4. Interest on Savings Bank Account with Bank or Post Office:
As per the applicable tax laws, you can get an exemption up to Rs. 10, 000 in aggregate per year on interest earned on savings bank account. If the interest is received from a fixed deposit (FD), then there is no deduction.
5. Buying Medical Insurance Policy for Self, Spouse and Dependent Kids:
You can avail an exemption up to Rs. 25, 000 by purchasing a medical insurance policy for yourself, your spouse and dependent children. Deduction up to Rs. 30, 000 is available if you and your spouse is above 60 years of age. You get an additional exemption of Rs. 25, 000 if you get your parents insured. However, no such exemption is provided for parents-in-law.
In order to save tax, many taxpayers show benevolence by making donations for philanthropic purposes or by contributing to National Relief Fund. In a few cases, 100% exemption is allowed and in a few cases, 50% deduction is allowed. The FM has pre-defined the list of organisations to which you can donate and avail the tax benefit. Donations made in kind are not liable for any deductions.
7. Treatments for diseases like AIDS, or malignant cancers for oneself and dependents:
Exemption up to Rs. 40, 000 is allowed for treatment of diseases like cancer and AIDS for self and his dependents. However, a deduction of Rs. 60, 000 is offered for patients of age 60 and above, and Rs. 80, 000 for the age of 80 and above. You can also avail a tax-free reimbursement in a year if you or any of your dependent is differently-abled.
8. Investing in Sukanya Samriddhi Account:
The Prime Minister of India, Mr. Narendra Modi has introduced opening of Sukanya Samriddhi Account under ‘Beti Bachao Beti Padhao’ campaign. You can open an account under this scheme in the name of your daughter and get tax exemption.
The prevailing tax structure in India is intricate and you may find it difficult to understand the whole structure of tax and enjoy the benefits. Hence, the article intends to help you better understand the several ways you can reduce the income tax legally.
You may also like to read: Income Tax Planning For Salaried Employees in India
Most Searched Topics
- Top 5 Best Mutual Fund Plans to Invest in India in 2017
- Section 80D Deduction for A.Y 2016-17
- Section 80C Deduction for A.Y 2016-17
- What is Form 16 & How To Download It
- Income Tax Exemptions for Salaried Employees
- Tax Benefits on a Health Insurance Policy
- Section 80D Mediclaim Income Tax Deduction for Individual
- Section 80D of ITA: Deductions for Medical Insurance and Preventive Health Checkups
- How to Check Income Tax Return Status Online?
- Income Tax Planning For Salaried Employees in India
- Income Tax Benefits in FY 2016-17 on Home Loan Interest
- Income Tax Deductions under Section 80D of Income Tax Act, 1961
- Advantages and Disadvantages of the Tax-Saving Fixed Deposits
- How to Pay Income Tax Online in India 2017
- How to Save Tax on Salary?
- Tax Exemption on Health Insurance under Section 80D
- Compute Your Income Tax through the Income Tax Calculator
- Section 80D Tax Deduction For Medical Insurance Premium And Mediclaim Reimbursement Allowance Under Section 10
- How to Save Tax with Health Insurance?
- Know about Mediclaim Deduction for the AY 2016-17 and Plan your Future with us at Policy Bazaar!
- Income Tax Filing For the Freelancers
- How to File Income Tax Return Using Form 16
- Understanding Salaried Income and Its Tax Computation
- An Insight into Section 80D Deductions for Health Insurance Premium and Checkups
- Systematic Investment Plan (SIP) - Features, Benefits & Process of SIP
- How to Send Your ITR-V to CPC Bangalore
- How to Check ITR-V Receipt Status?
- How to Make Corrections to TDS Returns?
- eFiling Income Tax
- What is TDS (Tax Deducted at Source)?
- Tax Benefits on Children's School Fees
- How To Save Income Tax on House Rent Allowance
- Income Tax Slabs Rates for Financial Year 2016-17
- Handling Income Tax Notices form IT- Department
- What is the Difference between AY and FY?
- How to file Income Tax Return Online in India?
- Tax Exemption on Insurance Premiums
- Learning to Calculate Income Tax Levied on Salary Income
- How to View Filed TDS Statement on Income Tax Website?
- Best ways to save tax - Income Tax Saving Tips
- Take Home, Net Gross Salary vs CTC
- How to get Income Tax Return Form?
- Let's Talk About Part A and Part B in Form 16
- What is Reliance Tax Saver Plan?
- Advance Tax Payment Guide
- 5 Common Tax-Saving Mistakes and How to Avoid them
- Easy & Simple Steps to Upload TDS Returns Online
- NRI's without Pan: How to Avoid Higher TDS
- Complexity of Income Tax on Taxable Income
- All You Need To Know About From 27C
- TDS Will Not be deducted on Interest Paid to MUDRA
- Calculating Estimated Business Taxes
- Why Should You E-File Your Tax Returns
- Control the Currency with Policy Bazaar: Income Tax Guide For Start-ups
- Missed the Tax Filing Deadline? Here's what you can do about it
- File It Right: How to Avoid Rejection of Your ITR-V
- Tips for Startups while Generating Form 16
- How to Reduce the Burden of Income Tax and Increase Your Take-Home Salary?
- Useful Tips on Tax-Planning in India
- Income Tax Refund - Basics, Process
- Income Tax Deductions under Section 80
- Best Way to Calculate Your HRA (House Rent Allowance)