" Tax saving options for salaried .

Salaried persons normally don’t have many ways to save tax. They are usually in dilemma in how to save tax on salary. They pay taxes at a higher rate slab i.e., 30%.

Every company helps their employees in tax planning according to 80C, which can be availed maximum of up to 150,000. When we file Income tax returns, many people avail themselves a deduction of 150,000 but due to lack of guidance, they could not avail other tax saving options for salaried. In this article, we will tell you about How to save tax.

Option-1) 80GG Deduction of Rent paid.

Deduction of 80gg can be availed only if you don’t receive HRA (House rent allowance) from your employer at any time during the financial year.

 

Deduction under section 80GG can be given least of the following

1. Total rent paid minus 10% of basic salary
2. Rs. 60000 per year (5000 per month)
3. 25% of adjusted gross total income.

80GG is a very popular section of tax saving by paying house rent & it helps in good amount of income tax saving

Option-2) Donation under section 80G.

If you have paid donations to institutions like the National Defense fund, Prime minister relief fund, or any other approved funds, you can avail of 100% of the amount donated as income tax exemption. Besides this, there are some approved charitable institutions (easily available in your area) that provide you deduction at the rate of 50% of the amount donated subject to a maximum of 10% of gross salary Income.

This is one of the main tax saving options for salaried and it can help you in saving tax in India. 80G approved NGO will provide you a certificate of 80g deduction and you can avail of the deduction.

If you want to avail of this option or you are facing difficulty in finding these NGOs, you can contact us and we will help you in maximum tax savings.

Option-3) Deduction u/s 80TTA of Income tax act.

80TTA deduction allows a deduction of a maximum of Rs. 10,000 Of interest received in saving bank account. If you are a senior citizen (more than 60-year age) then you can avail of a deduction of Rs. 50,000 of interest received on F.D. and in saving account.

This deduction normally doesn’t appear in form 16 of employees but its deduction is 100% valid and you should avail of it. It is one of the best income tax saving tips.

Option-4) Deduction for interest paid on Housing Loan u/s 24

As per section 24 of the Income-tax Act, if a home loan is availed by Taxpayer for the purchase/construction of a house and if construction is completed in 5 years from the last financial year in which the loan is taken, then you can save a good amount of tax.

EMI for home loan have a two component

• Principal amount
• Interest amount

The interest portion of your EMI in a year can be availed as a deduction of up to a maximum of 2 lakhs in a year under section 24. For let out property, there is no upper limit for claiming interest deduction.

If we talk about the principal component, that deduction is allowed under section 80C where you can claim deduction up to the amount of 150,000.

Option-5) Additional deduction for Home loan Interest under section 80EEA.

If the amount of stamp duty paid on a property does not exceed 45 lakhs then the home buyer is eligible for an additional deduction of 150,000 Rs under section 80EEA. The loan must have been sanctioned between 1 apr-2019 to 31 mar-2020 for this and on the sanction of loan, the taxpayer must not own any other house.

Takin a home loan with the specified limit can save you a good amount of tax because you are availing deduction in 3 different section. Government is providing 3 sections of income tax deductions for salaried employees

Option-6) Deduction for interest paid on loan taken for Higher education u/s 80E

 

Section 80E provides deduction for interest paid on loan taken for higher education. This deduction also covers if you use amount of loan towards travelling expenses, buying laptop for study or buy any other material related to study.

Main feature of this section is that you are eligible for deduction of interest with no upper limit and deduction is not only limited to taxpayer himself. If he takes education loan for

• Wife
• Children of the assessee including adopted children
• For any student for whom the assessee is a legal guardian.

Than taxpayer is also eligible for deduction. This can be good tax saving options in india if any taxpayer is sending their children abroad for education.

Option-7) Section 80D Tax Deduction for Medical Insurance

As per section 80D, if you have paid your premium for health insurance in a mode other than cash, than you are eligible for deduction up to 25000 Rs. In every financial year. For senior citizens, this limit extends up to Rs. 50000 Per financial year.

Medical Insurance for Parents.

If you paid premium of medical insurance of your parents, then you are eligible for a deduction up to 25000 In every financial year. In case, your parents are senior citizens, then you can avail the deduction of Rs. 50,000 per year.

These two are very popular tax saving options for salaried.

Option-8) Section 80DDB for deduction in case of medical treatment for specified disease .

This section provides deduction for expenses incurred in treatment of specific disease.

Diseases like neurological diseases, malignant cancer, AIDS, and other diseases are covered in this section. You will need supporting documents to claim this disease.

Amount of deduction under section 80DDB is as follows-

Age of person	Amount
Age less than 60 year	40,000 or actual expense whichever is lower
Senior citizen 60 year & above	100,000 or actual expense, whichever is lower
Very senior citizen 80 year & above	100,000 or actual expense- lower

Option -9) Section 80C of Income tax act

Any individual or HUF can avail of a deduction of up to 150,000 in a financial year. 80c covers many types of instruments. By investing in them, you are eligible for deduction under section 80C.

Some of them are-

• Employee provident fund (EPF)
• Public provident fund
• ELSS Fund (Equity linked saving scheme)
• Life insurance premium
• Senior citizen saving scheme
• Tax saver fixed deposit
• National saving scheme
• Unit linked insurance plan

Additionally, expenses incurred on children's education, interest on a home loan are also covered in section 80C. this is one of the main section of income tax deduction and also an answer to our main question- How to save tax in India.

Option-10) Section 80CCD deduction for contribution towards national pension scheme

A national pension scheme is backed by the central government & it has two tiers

NPS Tier-1- NPS for retirement planning

NPS tier-2-NPS for short term or medium-term investment

 

The limit of 1 lakh under Section 80CCD (1) was then increased to Rs. 1.5 Lakh (as per sub-section 1A of Section 80CCD). Moreover, a new subsection 1B has been introduced under Section 80CCD with an aim to provide an additional deduction of Rs. 50,000 for the contributions made by all individual assessee towards the new pension scheme. And the additional Rs.50,000 deduction limit is over and above the deduction limit allowed under Section 80C of the Income Tax Act, 1961.

Conclusion

Therefore, we have explained 10 ways, in which you save a good amount of tax but each section has its own limit & eligibility criteria. You will need an experienced chartered accountant for saving tax in a legal way.

CA’s from TAX ADVISORY will help you in saving tax. You will get a proper consultation for deductions. Book a consultation with tax advisory (India’s leading legal service provider) and get your Income Tax return Filled with huge tax savings on your fingertips.

For other services visit- www.taxadvisory.in

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