People are always concerned about the Tax and Tax related issues. They don’t like to pay huge amount every year as income tax to the government instead search for alternative ways to save tax. What is the way out from this? How to reduce the Tax amount? How to avoid tax? All these are the questions rush into our mind when we think about tax. Is there any way to save Tax? Yes, there are many ways to reduce the Tax burden. In this article we are going to discuss about the Tax saving Strategies after the Budget 2011.
Know more about tax planning
Following are the ways to save tax after the budget 2011. There are so many sections which will help you to save tax in different ways. Here we are trying to point out some of the techniques to save tax.
Restructuring of Salary
Restructuring of your salary may not be possible always. But if your company permits, or if you are on good terms with your HR department, restructuring a few components of your salary could really help in reducing your tax liability. Following are the components which should include in your salary.
Food coupons are exempt from tax up to Rs 60,000 p.a. So opt for food coupons instead of lunch allowances. Opting for the company car instead of using your own car will help you to reduce high prerequisite taxation.
Produce bills of actual expenses incurred for all these allowances to reduce tax.
Section 80C offers a maximum deduction up to Rs. 1, 00,000. You can avail this benefit by investing in different investment options. Utilize this section to the fullest by investing in any of the available investment options. A few of the investments are as follows.
Deductions: Upto Rs. 1,50,000
Infrastructure Bonds (Section 80CCF)
In addition to the Rs 1,00,000 deduction under 80C, a deduction of Rs 20,000 is also available for investments in notified Infrastructure Bonds
Deductions: Upto Rs. 20,000
Medical Insurance (Section 80D)
By taking medical insurance for you, your spouse/ children and parents, you can avail tax benefit. For medical insurance of self spouse and dependent children you can avail a deduction up to Rs. 15,000. If you are taking medical insurance for your parents above 65 years you will get deduction upto Rs. 20,000.
Deductions: Upto Rs. 35,000
Medical Treatment(Section 80DD)
Amount spent for the medical treatment of dependents with a disability qualify for tax benefits under Section 80DD. In this case, deductions up to Rs. 50,000 or 75.000 can be claimed based on the importance.
Deductions: Upto Rs. 75,000
Donations to specified funds or charitable institutions
Deductions: There is no upper Limit
House Rent Allowance (Section 80GG)
Are you paying rent, you can get deduction on house rent paid even if you are not receiving any HRA (House Rent Allowance). The least of the following could be claimed under Section 80GG.
You can use your home loan efficiently to save income tax. The principal component of your loan, is included under Section 80C, offering a deduction up to Rs. 1, 00,000. At the same time the interest portion offers a deduction up to Rs. 1, 50,000 separately under Section 24.
Use your (LTA) Leave Travel Allowance for your holidays, which is available twice in a block of four years. In case you have been unable to claim the benefit in a particular 4 year block, you could now carry forward one journey to the succeeding block and claim it in the first calendar year of that block. Thus, you may be eligible for three exemptions in that block.
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