Income Tax Saving Tips: With the increase in income, tax liability also increases, but if tax planning is done in a smart way, it can be reduced, but can also be reduced to zero.
New Delhi. If you are a taxpayer paying Income Tax, then there is good news for you. Actually, as the income increases, the tax liability also increases. But if planning is done properly, then tax savings can be done even on higher salary brackets. If your salary is more than Rs 10 lakh per annum, then you have to pay heavy tax. If your salary is Rs 10.5 lakh, then you can save 100% tax on this salary as well.
For example, your annual salary is Rs 10.5 lakh and your age is less than 60 years, then you will come in 30% tax slab. Let us tell you how you can save tax-
Deduct Rs 50,000 as standard deduction.
If the annual income of a taxpayer is Rs 10.5 lakh, then you get a straight standard deduction of Rs 50,000. In such a situation, your taxable income becomes Rs 10 lakh.
Taxable income = 10,50,0000-50,000 = Rs 10 lakh
1.5 lakh can be saved under 80C
After standard deduction, you can save Rs 1.5 lakh under Section 80C of the Income Tax Act, 1961. In this, you can invest in EPF, PPF, ELSS, NSC and you can take advantage of tax exemption of up to Rs 1.5 lakh annually in the form of tuition fees for two children.
Taxable income = 10,000,000-1,50,000 = Rs 8.5 lakh
50 thousand discount under 80CCD
If you invest up to Rs 50,000 annually in NPS, then under Section 80CCD of the Income Tax Act 1961, it helps you to save income tax separately.
Taxable income= 8,50,000-50,0000= Rs 8 lakh
Home loan discount
If you have taken any home loan, then you also get the benefit of income tax exemption. Under section 24B of Income Tax, you can claim tax exemption on interest of Rs 2 lakh.
Taxable income = 8,00,000-2,00,000 = Rs 6 lakh
75 thousand rupees discount on insurance
Under Section 80D of Income Tax, you can claim a deduction of up to Rs 25,000 for insurance premium. Apart from this, if you buy insurance for parents (senior citizens), you can get an additional deduction of up to Rs 50,000.
Taxable income = 6,00,000-75,000 = Rs 5.25 lakh
25 thousand rupees discount on donation
Under section 80G of Income Tax, you can claim tax deduction on the amount given as donation or donation to the institutions. Through this also, you can get tax rebate of up to 25 thousand rupees.
Taxable income= 5,25,000-25,000= Rs 5 lakh
As per income tax rules, the tax on earning Rs 5 lakh is Rs 12,500 (5% of Rs 2.5 lakh). In such a situation, a rebate of Rs 12500 is available under Income Tax Section 87A, which means your tax liability will be zero.
- Total tax deduction = Rs 5 lakh
- Net income = Rs 5 lakh
- Tax Liability = Rs 0
