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How to Save Income Tax on Your Salary?

By Finserv MARKETS - Aug 5,2019
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How to Save Income Tax on Your Salary

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.

Finserv MARKETS is your one-stop destination for a sound financial future. The products available at Finserv MARKETS such as the Bajaj Finserv Personal Loan are tailor-made to take care of all your financial issues. Whether you want to apply for a personal loan or get insurance for you and your family, the online application process can make availing these products a hassle-free experience with quick approval, minimal documentation and other attractive benefits at the comfort of your home.

Finserv MARKETS, from the house of Bajaj Finserv is an exclusive online supermarket for all your personal and financial needs. Loans, Insurance, Investment and exclusive EMI store, all under one roof- anytime, anywhere!

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Bajaj Finserv Direct Limited ("BFDL"), erstwhile Bajaj Financial Holdings Limited is a registered corporate agent of Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company Limited under the IRDAI composite registration number CA0551 valid till 10-Apr-2021. BFDL also renders services to Bajaj Finance Limited (‘BFL’) and Bajaj Housing Finance Limited (‘BHFL’) (referred hereinafter as ‘Lending Partner’) in sourcing of customers, providing preliminary credit support activities, fulfilment services and post-acquisition customer services related to lending business. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522