As the end of the financial year nears, most salaried individuals are often in a frenzy to file their income tax returns. However, at the time of filing your taxes, it is important to know about the tax slab that you fit in and the required measures that you can take to save on your taxes.
As per the latest Income Tax norms, people with an annual income above INR 2,50,000 are subject to pay income tax as per their salary structure. The tax implications increase as per the increase in your annual income. If you fall under this tax bracket and are wondering how to save tax on your salary, below listed are some income tax savings options that could prove helpful –
Enjoy a tax redemption up to INR 1,50,000 under Section 80 C
Section 80 C of the Income Tax Act is a major tax saving avenue for most salaried individuals. Section 80 C allows you to save upto INR 1,50,000 on your income tax every year. The different provisions under Section 80 C that allow these type of savings include-
FD (Fixed Deposits) options: The savings you make on fixed deposits (FDs) for a tenure of 5 years or above are exempted from tax deductions. Such long-term FDs offer the dual benefit of substantial financial savings as well as tax benefits options. However, a point to be noted here is that the interest you earn on these FDs is subject to tax deductions.
Public Provident Fund (PPF): Public Provident Funds are government saving schemes under which you can get tax exemptions up to INR 1.5 lakhs every year. A PPF scheme has a fixed interest rate of 8% and the interest earned on your savings is also subject to tax exemptions
Equity Linked saving Scheme (ELSS): The investments made under ELSS mutual funds also help save on your tax. Compared to other tax saving options, ELSS have a short lock-in period of 3 years and enjoy tax exemptions up to INR 1 lakh.
Other options: Section 80 C also offers tax saving options such as National Savings Certificate, national pension system, Employment Provident Fund, Senior Citizen Savings Schemes, and some government welfare schemes.
Tax Savings through House Rents
Most companies make provisions for house rent allowances (HRAs) in their salary structure. Individuals can enjoy tax exemptions on these HRAs under the following conditions-
If they are presently staying in a rented house
If the rent on their residence is more than 10% of their monthly salary
In case you live in a rented house but your salary structure does not have any provisions for an HRA, you can still enjoy exemptions up to INR 60,000 at the time of filing your tax returns.
Open a Savings Account
You can open a savings account at any bank or financial institution. The money credited in the savings account attracts a certain interest every month. Under Section 80 TTA and Section 80 TTB of the Income Tax Act, the interest earned on your savings account is subject to tax deductions up to INR. 10,000. For senior citizens, the tax exemption limit extends to INR. 50,000.
Deductions on Loans and Insurances
The premium directed towards different types of loans such as home loan, personal loan, or business loan is subject to tax exemptions under the Indian Income Tax Act. Similarly, certain insurance schemes, such as ULIPs also provide tax-exemptions on the maturity amount. By availing such products through Finserv MARKETS you can enjoy such exemption benefits aswell other benefits like attractive interest rates on loans, lowest monthly premium and quick approval of finance services.
Donations and Charities
Most contributions that you make in donations or towards charities enjoy some level of tax benefits. In some cases, donations made towards certain non-profit organizations can be claimed for 50% of the donated amount. If the NGO towards which you are contributing has an 80G certificate, you can avail 10% claims on the total adjusted income.
As is clear from the above options, a salaried individual can save a lot on their tax by utilizing either of, or a combination of these options. To get expert financial advice about personal loans, life insurance or ULIP plans and how to save income tax using these financial tools, get in touch with our representatives at Finserv MARKETS.
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