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Tax saving tips in India

January 30, 2016
tax saving tips in india

On the finish of every financial year, many taxpayers frantically make investments to cut down taxes, without adequate abilities of the more than a few available options. The earnings Tax Act offers many extra incentives and allowances, apart from the fashionable 80C, which would decrease tax liability radically for the salaried members. listed below are seven intelligent tips to aid you to save more and cut back taxes.

1. Salary Restructuring

Restructuring your cash won't without end be viable. But if your group makes it possible for, or if you are on just right terms alongside along with your HR division, restructuring a couple of components would curb your tax legal responsibility.

  • Select food coupons on the other hand of lunch allowances, as they are exempt from tax as a lot as Rs. 50 per meal
  • Comprise scientific allowance, transport allowance, education allowance, uniform expenditures (if any), and phone fees as a part of earnings. Produce expenses of unique expenses incurred for these allowances to curb tax
  • Prefer the corporation auto instead of utilizing your own auto, to scale back excessive prerequisite taxation.

2. Utilizing Section 80C

Section 80C presents the highest deduction of up to Rs. 1,50,000. make use of this section to the fullest by using investing in any of the to be had funding options. a few of the choices are as follows:

  • Public Provident Fund
  • Lifestyles insurance premium
  • Countrywide financial savings certificate
  • Equity Linked savings Scheme
  • 5-year constant deposits with banks and post administrative center
  • Tuition expenses paid for children's education, as much as a highest of two kids

3. Options beyond 80C

When you have exhausted your restrict of Rs. 1,50,000 under part 80C, listed here are a number of more choices:

  • Section 80D - Deduction of Rs. 15,000 for clinical insurance of self, Spouse, and stylish kids and Rs. 20,000 for clinical insurance of dad and mom above sixty-five years
  • Section 80G- Donations to special cash or charitable associations.

4. House Rent Allowance

Are you paying employ, but not receiving any HRA out of your company? The least of the following could be claimed under section 80GG:

  • 25 percent of the complete sales or
  • Rs. 2,000 per thirty days or
  • Excess of rent paid over 10 per cent of wholesales

This deduction will nevertheless not be allowed, in the event, you, your spouse or minor child owns a residential accommodation in the region where you stay or perform office tasks.

If HRA varieties part of your revenue, then the minimum of the following three is available as exemption:

  • The precise HRA received out of your organization
  • The actual rent paid by you for the residence, minus 10 percent of your earnings (this entails normal dearness allowance if any)
    50 percent of your common salary (for a metro) or forty percent of your general cash (for non-metro).

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5. Tax Saving from Home Loans

Use your house personal loan effectually to avoid wasting extra tax. The foremost component of your personal loan is integrated underneath section 80C, supplying a deduction as a lot as Rs. 1,50,000. The interest portion offers a deduction as much as Rs. 2,00,000 in my view beneath part 24.

6. Leave Travel Allowance

Use your depart travel Allowance in your vacations, which is to be had twice in a block of four years. when you have been unable to assert the improvement in a targeted 4- yr block, you would now raise forward one experience to the succeeding block and claim it within the first calendar yr of that block. Consequently, you'll be eligible for three exemptions in that block.

7. Tax on Bonus

A bonus from your enterprise is fully taxable within the yr in which you receive it. nevertheless, request your organization to the next:

  • In case you anticipate tax premiums to be decreased or slabs to be modified within the subsequent yr, see if you happen to could push the bonus fee to the next 12 months
  • Produce your tax investment small print well before, to preclude your service provider from deducting tax on bonus before handing it over

8. Final Tip

Hold in mind the below elements, to restrict the hassles of last minute tax planning.

  • Supply your corporation small print of loans and tax saving investments previously, to hinder any extra deduction
  • Investigate the form sixteen bought on the finish of each 12 months out of your employer wholly
  • It's principal to begin your tax planning good earlier than thirty-first March and to file your returns before the 31st of July each and every yr
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