Earning a good money throughout the year is never a pain for any individual, any person but not paying taxes every one desires but there is no way but you have to pay taxes in India based based on your income.
Tax saving is not a month or a day job but it should be well planned ahead of the year in order to maximize your tax savings. There are several easy ways or rules which you can implement to avoid max taxes.
- In several big and small companies people have option to redefine there salary components. Often they go for several schemes given by companies to avoid taxes, like food coupons or sudexos. Some companies provide a huge income
- You can go for medical allowances, telephone expenses etc, and producing bills for each can help you in saving your tax money.
- Opt for company car instead of your own car.
Section 80C offers a at most deduction of up to Rs. 1,00,000. This can be fully utilized by investing in any of the available investment options like Public Provident Fund
- Life Insurance Premium
- National Savings Certificate
- Equity Linked Savings Scheme
- 5 year fixed deposits with banks and post office
- Tuition fees paid for children's education, up to a maximum of 2 children
Above are the common tax saving schemes used by several people in the people working in public and private companies, as apart from saving the money from tx, this also help them secure there needs for the future.
More beyond 80C:
Often we exhaust our limits of Rs. 1,00,000 under section 80C, so going further we have other option where we can do the investment to save the taxes:
- Section 80D - Deduction of Rs. 15,000 for medical insurance of self, spouse and dependent children and Rs. 20,000 for medical insurance of parents above 65 years
- Section 80G- Donations to specified funds or charitable institutions.
House Rent Allowance (HRA):
under HRA the following can be claimed under Section 80GG:
- 25 per cent of the total income or
- 2,000 per month
- Excess of rent paid over 10 per cent of total income
This deduction will however not be allowed, if you, your spouse or minor child owns a residential accommodation in the location where you reside or perform office duties.
Tax Saving from Home Loans(80C)
The principal component of your loan, is included under Section 80C, offering a deduction up to Rs. 1,00,000. The interest portion offers a deduction up to Rs. 1,50,000 separately under Section 24.
Leave Travel Allowance(LTA)
Use your Leave Travel Allowance (LTA) 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 four- 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.
Tax on Bonus
A bonus from your employer is fully taxable in the year in which you receive it. However request your employer for the following:
- If you anticipate tax rates to be reduced or slabs to be modified in the subsequent year, see if you could push the bonus payment to the subsequent year
- Produce your tax investment details well before, to prevent your employer from deducting tax on bonus before handing it over
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