How to save Income tax or tax planning ways

How to save Income tax or tax planning ways

In this article we discuss about the ways a person or Individual can save the within the Law bracket/ Tax planning ways

1. House rent deduction
If your are employee and you are getting HRA then this is one of the way you can save your tax
How to calculate HRA Exemption 10(13A)

The deduction available is the least of the following amounts:

a. Actual HRA received;

b. 50% of [basic salary + DA] for those living in metro cities (40% for non-metros); or

c. Actual rent paid less 10% of basic salary + DA

If you do not get HRA but pay rent, you can claim a deduction under Section 80GG up to maximum Rs 60,000 per Annam i.e 5000 per Month.

2.Interest on your Home loan:
If you have taken the loan for purchase/construction of a house and the construction of the house must be completed within 5 years from the end of financial year of the house then the Interest paid on such loan can be claimed U/s 24(b) maximum of Rs. 2 Lakh.

Benefit of Home loan
1. Interest benefit u/s24(b) Max. Rs. 2 Lakh
2. Principal payment deduction U/s 80C Max. Rs.1.5 Lakh

3.Interest in saving Bank:
Interest on saving account Exempt up to Rs.10000 for individual as per section 80TTA and senior citizen maximum Rs. 50000 for Interest on saving and FD account as per section 80TTB.

4.Medical insurance:
Any individual paying medical insurance can get deduction u/s 80D of Rs. 25000 of individual and for senior citizens Maximum Rs. 50,000. i.e maximum 75000 for self and parents for person contributing in medical insurance.

5. National pension scheme(NSC):
As per section 80CCD(1B) an individual can avail deduction by contributing in NPS of Maximum Rs. 50000. The NPS allows you to invest in equity and debt pension funds and build a retirement corpus. Maturity can be taken on 60age. This is over and above 1.50Lakh.

6.Contribution in section 80C different plans:
Maximum limit 1.5 Lakh

*FD for 5 Years(Interest is taxable).

*PPF- Tenure is 15 years, Interest on PPF is tax free.
*ELSS Fund: Lock in period is 3 year.
*NSC:
*Home loan principal payment
*LIC
* Tuition fee:I.e school fee
*EPF:
*Senior citizen saving scheme: Tenure is for 5 years and is available to those above 60 and interest on that is taxable.
*Sukanya Samriddhi Yojana: Parents of a girl child below the age of 10 can get this deduction, Maximum tenure is 21 year or until the girl marries after turning 18.Interest is tax free.

7. Donation:

For certain government NGO it has 100% dedution of your contribution
for other NGO this is 50% subject to maximum 10% of Your adjusted total income

8. Higher education loan: as per sec. 80E Interest on loan taken for Higher education is qualified for deduction from Taxable income. Maximum period is 8 year.
9.Interest on NRE Account: Interest on NRE account either from saving or FD is not taxable in India. A NR can take loan from other country at cheaper rate and can inverse in India to earn income more.
His earning is taxable in the country in this his income is taxable.
10. Donation to Political party:
As per section 80GGC donation to political party qualifies for 100% Deduction. No maximum limit is there.
11. Section 80CCG Rajiv gandi equity saving scheme:
If a person having Total income less than 12 lakh P.A.is allowed an additional deduction by investing first time in specified securities and mutual funds. Investor should be first time investor is shares and MF.
12. Saving of capital Gain Income:

A person can save their tax by investing in schemes made by government of depositing the capital gain or total consideration in different ways.

Bird eye view
Considering you are contributing maximum

Standard deduction : 50000/-
Section 80C : 150000/-
Section 80CCD(1B) : 50000/-
Section 80D : 75000
section 24(1B) : 200000