Top 5 Ways to Save Taxes on Salary

Top Five Ways to Save Taxes on Salary Income

This infographics would discuss about best ways to save taxes on salary income by doing proper tax planning. Some of ways to do so, is to claim full benefits of deductions of Rs. 1Lac under section 80C by investing in Provident Fund /Voluntary Provident Fund, Public Provident Fund, Life Insurance Premium, Unit Linked Insurance Plan (ULIP) / Unit Trust of India (UTI), Tuition Fees maximum for 2 childrens, etc, OR using options other than 80C, such as deduction u/s 80GG for payment of rent or claiming HRA u/s 10(13A) , or Deduction u/s 80CCD  for contribution by employer and employee (limit 1, 00,000) to pension scheme will be eligible for deduction, Deduction u/s 80D – for claiming deduction for Medical Insurance Premium paid. Housing loan benefits is also a way to save taxes, for principal amount, Stamp Duty and registration charges u/s 80C,  Interest amount u/s 24(b).  You can also look to maintain separate income tax file in the name of HUF and avail benefits.  Another way is to restructure your salary by including,  Dearness pay and dearness allowances should form part of your salary,go for exempt perks rather than going for taxable allowances.

Infographics – Top Five Ways to Save Taxes on Salary Income Today TAXMANTRA Decodes 5 Ways to Save Taxes in Salary Income 1st Way- Use 80C to the maximum If you are a Salaried Individual then you should use 80C to the maximum limit of Rs. 1 lakh by investing in these options: • Provident Fund (PF) /Voluntary Provident Fund (VPF) • Public Provident Fund (PPF) • Life Insurance Premium • Equity Linked Savings Scheme (ELSS) • Home Loan Principal Repayment • Stamp Duty and Registration Charges for a home • Unit Linked Insurance Plan (ULIP) / Unit Trust of India(UTI) • Tuition Fees maximum for 2 childrens • Bank Fixed Deposits or Term Deposits • Post Office Time Deposit • National Savings Certificate (NSC) 2nd way- Other than 80C If paying rent for accommodation then saves taxes in either of the two options- • If you are receiving House Rent Allowances (HRA) then you can claim exemption of the same u/s 10(13A). • Otherwise claim deduction u/s 80GG Investment in sec 80CCD - Contribution by employer and employee to pension scheme would be eligible for deduction is available subject to a maximum of 10% of salary. In case of self employed individual, the contribution limit is restricted to 10% of gross total income 10% of salary. • For Employee - Deduction shall be allowed within the aggregate ceiling limit of Rs.100000 taking into account deductions u/s 80C, 80CCC and 80CCD. • For Employer - with effective from assessment year 2012-13 (financial year 2011-12) employer’s contribution shall not be counted for computing the overall limit of Rs.100000. • 80GG up to Rs. 24,000. Deduction of medical insurance premium u/s 80D- • If age is less than 60 years than Premium amount or Rs. 15000, whichever is lower. • If age is more than 60 years than Premium amount or Rs. 20000, whichever is lower. 3rd way- Home loan benefits Home loan can save your taxes in 2 ways- • Can claim deduction for principal amount u/s 80C • Can claim deduction for interest amount u/s 24(b) In case of Self Occupied interest limit is as follows – Rs. 1, 50,000 – If loan is taken for acquisition or constructing purpose. Rs. 30,000 – If loan is taken for re-constructing, renewal or repairing purpose. In case of Let out – No limit In this way the total amount of home loan can be claimed. 4rth way- Maintain separate income tax file in the name of HUF- • HUF gets exemption of Rs 1,80,000 for individual income and another Rs. 1,80,000 for HUF income. • HUF can get exemption for maximum Rs. 100000 u/s 80C • Deduction can be claimed by investing Rs. 20000 in infrastructure bonds. • HUF can receive free gifts up to Rs 50000. 5th way – Restructure your salary Here are the few ways of restructuring your salary- • Dearness pay and dearness allowances should form part of your salary. • You should go for exempt perks like medical reimbursement, telephone expenses etc., rather than going for taxable allowances like medical allowances, telephone allowances. • Employer’s contribution towards PF is exempted up to 12% of Salary, employer may get the extra benefits to the employee by raising their contribution to 12% of salary without increasing tax liability.  

One thought on “Top 5 Ways to Save Taxes on Salary”

Leave a Reply

Your email address will not be published.