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Tax Planning Tips 2009

IndianMoney.com Research Team | Posted On Saturday, November 21,2009, 05:56 PM

Tax Planning Tips 2009

 

 

Tax Planning is a tool to reduce tax liability through the finest use of all accessible allowances, exclusions, deductions, exemptions, etc. to trim down income and/or capital profits. Salaried individuals in India are not fully aware of the tax planning exercise; we always do it at the end of Feb or Mar, because of which we end up into wrong decisions.

The plans may vary for different persons depend on the financial status of a person and income. I would write the common way for reducing the tax. Before starting, we should know about the tax slab for the male and female candidate as per income tax law.

Income Tax Slab 2009

Income Tax Slabs 2009/2010 for Men

Income

Tax Rate

Upto 1.6 lacs

NO TAX

1.6 lacs to 3 lacs

10 %

3 lacs to 5 lacs

20 %

Above 5 lacs

30 %

Income Tax Slabs 2009/2010 or Women

Income

Tax Rate

upto 1.9 lacs

NO TAX

1.9 lacs to 3 lacs

10 %

3 lacs to 5 lacs

20 %

Above 5 lacs

30 %

Income Tax slabs 2009/2010 for Senior Citizen

Income

Tax Rate

upto 2.4 lacs

NO TAX

2.4 lacs to 3 lacs

10 %

3 lacs to 5 lacs

20 %

Above 5 lacs

30 %

* In addition to the income tax calculated according to the above income tax slabs, a 3% of Education cess will be charged on the total Income tax paid (not on the total taxable income). If the taxable income exceeds Rs. 10 lacs, a 10% surcharge on the total income tax (not on the total taxable income) is also charged.

Ways of Reduce tax for Salaried People

1. You can save Tax up to Rs 100,000 under Section 80C - by making the following investment:

Note: Salaried citizens whose gross salary is Rs 250,000 or more are entitled to use the full Rs. 100,000 limit.

2. If your salary surpasses Rs 250,000 pa, the reductions under Section 80C are not enough to minimize the general tax liability consider the following:

  • Home loan Interest payment

  • Medical insurance

  • Donations

  • Tax advantages on house rent

Home loan Interest Payment

Home loan Interest payment upto Rs 150,000 pa are entitled for reduction under Section 24.

Medical Insurance

A deduction of upto Rs 15,000 pa under section 80D is applicable under this. An additional deduction upto Rs. 15000 (Rs. 20,000 in case of the person insured is senior citizen) shall be allowable in respect of medical insurance premium for parent(s) whether or not dependent on the assessee.

Donations

Donations to particular funds and charitable institution are entitled for reduction under Section 80G.

Tax Advantages on House Rent

If House Rent Allowance (HRA) is not included in the salary structure then salaried individuals can benefit rent paid by them for residential lodging. This benefit is available under Section 80GG and the deduction amount is given below;

  • 25% of the total earnings or,

  • Rs 2,000 every month or,

  • Surplus of housing charge paid over 10% of total salary

Salary reform is a better tool to get tax benefits. Following things can be included in an individual’s salary structure: 

  • Food coupons can release up to Rs 60,000 per year from tax.

  • Medical expenses which are compensated by the employer spare up to Rs 15,000 per year.

  • House Rent Allowance (HRA) should be incorporated in the salaries of individuals who stay in rented houses

  • Transport allowance discharge upto Rs 800 per month.

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