The financial year 2016-17 is about to end and many of us will be worried about the taxes we have to pay this time. Whether you are a fresher or an experienced one everyone want to pay less on taxes and want to save some amount. As, who want to pay more when you can save some amount legally. The tax imposed by our government is not only on one’s basic salary but it is also on the allowances which you get. As a result the tax deduction can affect your pocket and finances to a great extent.
11 Ideas for Salaried Persons to Save Income Tax
Use section 80C.
Under this section you can get a tax exemption up to INR 1.5 lakhs. Try to claim this total amount for tax deduction. Under this section you can avail the tax exemption if you invest in the following:
Life Insurance Premium
Home Loan Principal Repayment
Senior Citizen Saving Scheme
National Saving Certificate
Kid’s Education Fees
Employee Provident Fund (EPF)
Public Provident Fund (PPF)
Post Office Tax Saving Deposits
Sukanaya Samriddhi Scheme
Equity Linked Savings Scheme
Go Beyond Just the Tax Planning this FY 17-18
Claim tax benefits on your rent payments
Salaried person who lives in rented house can claim tax benefit on their HRA. There can be a fully or partial tax exemption on the HRA can. But if one don’t have a rented accommodation and still gets house rent allowance (HRA), In this case the allowance will be fully taxable. HRA tax exemption is also available if you live with your parents, as rents can be paid to them too. But your parents should include this rental income (given by you) in their tax return. You don’t have to worry if you couldn’t submit the rent receipts to your employer on time, claim your HRA exemption at the time you filing your tax returns. Keep the rent receipts safely and always maintain details of payments made for the rent.
Claim tax benefits
Your vacations bills can also help you to save.
You can save a part of your tax by submitting the bills of your vacation as on LTA (Leave Travel Allowance) some tax exemptions can be availed. This is applicable for the trip only within India. This LTA is not a mandatory benefit. It completely depends on your employer who decides your pay structure. If LTA is included in your pay structure you can avail this exemption otherwise it cannot be availed.
Saving Tax on Home Loans
Buy a medical insurance for your family and save on tax
You can buy a medical insurance plan for yourself, your spouse or for your children. By doing this you are not only securing your family’s and your health but you can get a tax exemption for this. On a health insurance of your family you can claim a tax deduction up to a maximum of INR 25,000 and if you buy a policy for your parent you can claim for a maximum of up to INR 30,000 deduction. This tax exemption comes under the section 80D. Even if you have not taken any policy till now it’s not too late. Take a policy now only and you can claim this for tax exemption this year only while the benefits of the policy can be availed from next year onwards which depends on the terms and condition of the policy.
Under section 80E. (tax benefit on loan for higher education)
If anyone has taken a loan for his/her higher education than that person can avail a tax benefit. This loan has a tenure maximum of 8 years. So you can avail this tax benefit until you repay the loan.
How to Save Tax on Long Term Capital Gains?
If you have an option to encash you leaves then do so. You can get a tax exemption on your leaves up to maximum of 3 lakhs. Always keep in mind that the leave encashment in your working tenure is always taxable. Tax exemption can only be availed while retirement or resignation.
Save on taxes through salary Restrictions
Many expenses in your life is because of your job. Such as wearing a particular dress at your job, traveling to different places frequently, reading many newspapers and magazine, talking on phone with people. All these expenses are because of your job, and most of the companies pay for this if your job profile need all these things. So there is no need to pay full tax on all these expenses. This expenses are non-taxable if you pay bills for all the expenses on your allowance.
Save on tax
Some of these allowances are:
Newspaper, Books and Magazine
Telephone and mobile