There are several ways to save tax legally in India. Systematic tax planning during the year, can help you save tax. Before you start tax planning, you should know some basic points about saving your taxes. You can save taxes by using Section 80C, Section 80D and a lot of other sections. There are several income tax deductions and exemptions you can use, to save your taxes.
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You get HRA from your employer, as part of your salary package. You get this amount, towards the expenses of your rented accommodation. Your employer decides how much HRA you get, based on your salary and the city/metro where you reside. You get tax exemption on your HRA, under Section 10(13A) of the income tax act.
The HRA (House Rent Allowance) given to you by your employer is subject to:
The actual rent you pay – 10 % * (Basic salary)
50% of (Basic Salary) in case you reside in a Metro
40% of (Basic Salary) if you reside in any other city
Actual HRA you receive from your employer.
You have to pay tax on the amount received from your employer, minus the amount which is the least among the above three conditions.
There are certain investments you can make, such as EPF, PPF, ELSS, NSC and so on, which can help you to save tax and grow wealth simultaneously. You get tax deduction up to INR 1,50,000 a year under Section 80C, if you invest in any of these financial instruments.
You can save tax, if you have availed health insurance for yourself and family. You have the Section 80D of the income tax act, where you get a deduction of INR 25,000 a year on the health insurance premium you pay for a health plan for yourself and your family, if you are under 60 years of age. In case of premium for a health plan of a senior citizen (above 60 years of age), the deduction allowed shall be up to INR 30,000 a year.
You might not be aware of this benefit; you get under Section 80D. You can claim a tax deduction on the expense you incur, on a health check up. You are allowed a maximum deduction of INR 5,000. You get this benefit on the health check up for yourself, family and parents.
If you have taken an education loan for your higher education or for your spouse or children, you can claim deduction for the interest paid on the loan, under Section 80E of the income tax act.
If you make a donation towards charity, social or a philanthropic cause or made a contribution towards the National Relief Fund, than this donation can be claimed as deduction under Section 80G.
Yes…There are a several ways you can save tax. All you have to do is put them to use. Be Wise, Get Rich.Under : Financial Planning