How to save tax Tips, Tricks and ideas in INDIA.
Suppose if you are earning an income of Rs 5.50 lakhs then you will have an exemption of rs 2.50lakh because income of rs 2.50 lakh does not come under taxation, it is a general tax rebate given by govt of INDIA. Now if you have invested for obtaining rebate in tax which is 2 lakh maximum then you have to pay tax on the remaining 1 lakh.
Income (5.50 lakh)- 2.50 lakh (basic exemption)- 2 lakh (investement)= 1lakh taxable income.
To obtain the rebate of Rs 2 lakh you can opt out the options given under 80c and 80ccd(1) for rs1.5 lakh and Rs 50000.00 in NPS under 80ccd(1b).
For Ex: if you have an income of Rs 7lakh then you fall under tax slab of 20%. And if you have invested Rs 2 lakh then your taxable income would be Rs 5 lakh and then you will fall under tax slab of 5%.
Investments to save tax:
Under section 80C:
LIC, EPF, FD (5 YEARS OR MORE), PPF, MUTUAL FUND, ANNUITY PLAN, POST OFFICE SMALL SAVING SCHEME, REPAYMENT OF THE PRINCIPAL AMOUNT OF HOME LOAN.
MAXIMUM REBATE IS Rs 1.5 lakh.
Rebate Under section 80d:
Rebate upto Rs 25000.00 for health insurance of Yourself, husband, wife, children and for parents. If the parents are senior citizen then the tax rebate can be upto Rs 30000.00
Rebate under 80CCD:
You can claim Tax rebate upto Rs 50000.00 by making an investment of upto 10% of your salary in NPS (New Pension System).
Tax rebate under section 80E:
You can get rebate and save tax on the interest paid on the education loan repayment of yourself or children.
Most popular ways of investment :
PPF (PUBLIC PROVIDENT FUND):
If you are upset by the highs and lows of share market then you will love this fixed income investment plan. You will get the income tax rebate in this section and also the interest that you will receive under this investment is tax free and there is no tax on maturity.
You can invest maximum 1.5 lakh under this scheme. The interest that you will receive is connected to govt bond yield and it is calculated every three months and now the interest rate has been increased to 8%.
NSC( NATIONAL SAVINGS CERTIFICATE)
Invest as much as you wish under this scheme moreover you can get a loan also by mortgaging your nsc. You can get a rebate of upto Rs 1.5 lakh under section 80C on the income received as interest for the first five years.
SSY (SUKANYA SAMRIDHI YOJNA): ZERO TAX ON MATURITY
IF you are planning to invest for study or marriage of your daughter then ssy is a better option available in the market . you can open account of maximum two daughters and their age must be less then 10 years. Maximum limit is Rs 1.5 lakh in a year. You can avail tax rebate under section 80c,enjoy tax free interest and also zero tax on maturity.
SCSS(SENIOR CITIZEN SAVING SCHEME)
As the name suggest it is for senior citizen. Interest rate has been increased to 8.7% yearly. Interest received is quarterly. you can invest a max of Rs 15lakh.
OTHER POPULAR OPTIONS FOR BETTER RETURNS:
ELSS (Equity linked saving scheme):
These are equity mutual funds and helps tax rebate under section 80C and the returns are also tax free and the maximum rebate is Rs1.5 lakh.
ULIP (UNIT LINK INSURANCE PLAN):
Most of the insurance distributors try to attract people by saying that it covers insurance plan and market cover both. You need to be really awake when you buy this, if it is taken according to needs then it is beneficial other you can found yourself robbed.
Apart from above options you can save tax in many other ways also:
Deduction for pre nursery:
You can claim tax rebate on the fees of play group, pre-nursery, nursery under section 80C. maximum rebate is Rs 1.5 lakh. You can avail benefits on the fees of two kids only.
Stamp duty and registration fees:
While buying ahome you pay stampduty and registration and you can get tax rebate under section 80C, maximum rebate is Rs1.5lakh but you need to take the rebate in the same financial year.
Interest paid to father or mother:
If you borrow some money from your parents then you can claim tax rebate on the interest paid to your parents under section 24B. maximum rebate is Rs 2 lakh only. Don’t forget to take the payment proof from your parents also.
Rent paid to parents:
When you pay rent to your parents and you have the proofs that you put up on rent in their home you can claim tax rebate under section 10 (13A).
Expenses done on the treatment of parents:
It is applicable only on senior citizens. If your parents are above 60 years old and you have made some expenses on their treatment, you can claim a tax rebate under section 80D. maximum rebate is Rs 50 thousand but if you have health policy you cant claim for any rebate.
So these are some general and common ways to save taxes in INDIA. You can also take help of under mentioned geniuses to take help in taxation.
Adhil shetty, CEO www.bankbaazar.com
Balwant jain, tax expert
AMAR PANDIT CEO www.happinessfactory.in