Tax tips for Financial growth: How to maximise your returns, save more tax, how to reduce tax deduction ?
Everyone wants to get certain exemption from income tax. So before starting discussion about ways to save money from income tax. I want to explain types of tax regime.
Old Tax regime: This tax regime contains income wise tax deduction such as 30% above 10 lakhs, 25% from 7.5 upto 10 lakhs, 20% from 5 to 7.5 Lakhs etc. This regime provides different investment sections as well in this regime such as Rental Allowance, 80c, 80d, 80ccd(1)(2)(1a)(1b), 80g etc.
New Tax Regime: This tax Regime doesn’t contain any sections to get tax exemptions but provides 100% tax exemption till 7.5 lakhs.
Ways to get exemption from income tax:
Section 80C: This section has several categories like EPF, PPF, LIC investments, FD(5 Years and above), NSC VIIIth issue etc. any salaried person can get tax exemption upto 1.5 lakhs in this section.
Section 80CCD: This section is dedicated for National Pension scheme. It has several subsections like 80ccd(1), 80ccd(1B) etc. 80ccd(1B) This subsection provides exemption upto 50000/- and this fund gets invested in National Pension Scheme with good interest. 80ccd(1) section is having no limit and it has same cap 1.5 lakhs including 80ccd(1) & 80c.
Section 10(13A): This section is for house rental allowances i.e. if a salaried individual is staying in rented house and his company is paying HRA component in his salary, then he is eligible to get exemption under this section. One good thing about this section is that exemption amount increases with salary increments. Complete HRA mentioned in salary slip is not fully exempted from tax, the least of the three conditions is considered for tax exemption:
HRA received from Employer
Actual rent – 10% of salary
50% of basic salary for metro cities
40% of basic salary for non-metro cities
Section 80D: This section is to get exemption for medical insurance upto 25000/- for non-senior citizens and upto 50,000/- for senior citizens. Apart from insurance there is one more subsection through which individual and parents are eligible to get upto 5000/- tax exemption for preventive health checkup.
To get this exemption individual has to take annual Health/Medical insurance from insurance companies.
Section 80G: This section is a facility present for individuals to get tax exemptions from various donations made to specified relief fund and charities.
Section 24(B): This section applies for payment towards home loan that is taken for constructing house and only annually paid interest component by individual is exempted from tax.
Section 80TTA: This section is applicable for getting tax exemption on interest earned on savings bank account(not on deposits interest). Tax exemption in this section is upto 10000/- annually. This section is not applicable for senior citizens.
Section 80TTB: This section is applicable to get tax exemption on interest earned on all kind of deposits upto 50000/-. This section is applicable only for senior citizen.
Rule 3(7)(ix): This rule is applicable to get telephone/internet reimbursement which employees get for performing their official duties are not taxable. Thus individual can claim 100% tax exemption on the paid amount.
Section 10(5)(LTA): This section is applicable to get leave travel allowance provided by employer for travelling to any place: either on leave, after retirement as well. LTA can be claimed for employee and their family(Spouse, Children dependent siblings and parents).