Income Tax Saving Tips: Often people say that their income is a little more than 5 lakh rupees annually, yet they have to pay income tax.
Actually, the new year has knocked, and people have started doing manipulations to save tax.
• You can save income tax through investment
• Tax saving up to 25 thousand by giving donation
• Benefit of tax exemption from medical policy
Often people say that their income is a little more than Rs 5 lakh annually, yet they have to pay income tax.
Actually, the new year has knocked, and people have started doing manipulations to save tax. You can take steps for tax saving till 31st March 2022.
Income Tax Saving Tips:
Income Tax Rule states that no tax will have to be paid on income up to 2.5 lakhs annually. There is a provision of 5% tax on income of 2.5-5 lakh rupees.
Whereas 20% tax is charged on annual income of Rs 5-10 lakh. At the same time, there is a 30% tax slab on annual income of 10 lakhs and above.
Looking at these slabs, it is clear that income above Rs 10 lakh will attract 30 percent tax. But if you want, you will not have to pay tax even a single rupee.
Even if your salary is Rs 10.50 lakh annually, you can still save the entire amount of tax by taking advantage of investment and income tax exemption. For this, you have to balance between Savings and Expenses.
How one will not have to pay tax on income of Rs 10.50 lakh:-
If your salary is Rs 10,50,000 per annum, then there is a provision of 30% tax on it. But how you will not have to pay tax even a single rupee.
1. There is a discount of up to Rs 50,000 as standard deduction. First of all, reduce it in your earning. (10,50,000-50,000 = Rs 10,00,000), that is, now Rs 10 lakh comes under the tax net.
2. You can save Rs 1.5 lakh under 80C. For this one has to invest in EPF, PPF, ELSS, NSC. Apart from this, you can take advantage of income tax exemption on the amount of up to Rs 1.5 lakh as tuition fees for two children.
Now you also reduce the income of one and a half lakh rupees. (10,00,000 - 1,50,000 = Rs 8,50,000), now Rs 8.5 lakh comes under the tax net.
3. If you invest up to Rs 50,000 annually in the National Pension System (NPS) separately, then under section 80CCD (1B), you can save an additional 50 thousand rupees in income tax.
Now deduct this amount also in the total income. (8,50,000-50,000 = Rs.8,00,000), now your 8 lakh earning comes under the tax net.
4. Home loan borrowers can save an additional Rs 2 lakh. If you have taken a home loan, then you can avail tax exemption on interest of 2 lakhs under section 24B of Income Tax.
You can also minus this in your annual income. (8,00,000-2,00,000 = Rs.6,00,000), now only Rs.6 lakh comes under the tax net.
5. By taking a medical policy under section 80D of income tax, you can save tax up to 25 thousand rupees. You, your wife and children should be named in this health insurance. You can claim deduction up to Rs 25,000 for health insurance premium including cost of preventive healthcare check-up.
Apart from this, if your parents are senior citizens, then you can get an additional deduction of up to Rs 50,000 by purchasing health insurance in their name. (6,00,000 - 75,000 = Rs 5,25,000), i.e. now income of Rs 5,25,000 comes under the tax liability.
6. You can take benefit of up to 25 thousand rupees in tax by giving donations or donations to institutions. This will be valid only if you submit a stamped receipt of donation or donation.
Under Section 80G of Income Tax, tax deduction can be claimed up to Rs 25000 on donations or donations made in the form of donations. (5,25,000-25,000 = Rs 5,00,000), now your income has come in the tax slab of 5 lakhs.
7. The Income Tax Rules clearly state that the tax on income of Rs 5 lakh becomes Rs 12,500 (5% of 2.5 lakh). In this case, a rebate of Rs 12500 is available under Income Tax Section 87A.
That means now you will not have to pay any tax. Zero tax will have to be paid in the slab of 5 lakhs. (5,00,000 (Income) - 5,00,000 (Total Tax Deduction) = 0 (Tax).
