How to Save Tax: If your annual income is more than Rs 2.5 lakh, then you have to pay 5% to 30% of the income according to income tax act. Today, we are telling 22 ways you can save taxes on your income. Some of these ways are for the people of the salary class and some ways are for business class people. First of all learn how people in the salary class can save tax. These methods are for the financial year 2017-18.
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Tax Savings Tips for Salary Class
Tax exemption under Section 80C
According to tax professionals, this is the most popular way of getting tax exemption under the Income Tax Act. Under this, you can claim tax deduction by depositing the premium of Life Insurance, ELSS Mutual Fund, EPF Contribution, Premium Payment of Annuity Plan, Investment in Post Office Small Savings Schemes and the principal amount of Home Loan. Apart from this, you can claim a tax exemption by investing in a 5 year bank FD and public provident fund. Under Section 80C you can claim tax deduction by investing a maximum of Rs. 1.5 lakhs.
Tax exemption under Section 80D
Under section 80D you can get a tax deduction by paying a health insurance premium of up to Rs 25,000 for yourself, your wife, children and parents, in addition to the tax deduction you get on Section 80C. If your parents are senior citizens and you are paying health insurance premiums for them, then you can get a tax deduction at the premium of up to Rs 30,000. Even if your parents are financially self-reliant, you can still get tax exemption under Section 80D.
Tax exemption under Section 80DD
If there is a member of your family who is financially dependent on you then you can claim tax exemption under section 80 DD. The amount of tax exemption will depend on the level of disability. For 40 to 80 percent disability, you can get tax deduction up to Rs 75,000, while for more than 80 percent disability, you get a tax rebate of Rs 1.25 lakh. To determine the level of disability, the disability certificate issued by a medical practitioner will be final authority.
Tax exemption under Section 80DDB
If you have a relative who is suffering from serious illness, then you can get tax deduction up to Rs 40,000 under section 80 DDB. It is important that the disease should be one of the provisions given in the rule 11D of the Income Tax Act. If you are a senior citizen, you can get a tax exemption of up to Rs 60,000 and if a person is more than 80 years old then he can get a tax rebate of Rs 80,000. To get tax exemption under section 80 DDB, you will have to give the certificate of illness to the hospital or medical specialist.
Tax exemption under section 80E
If you have taken education loan for yourself or children, you can get tax exemption under section 80E of the Income Tax Act. You can claim a tax exemption on the loan repayment you will pay. You can claim tax deduction for 8 years after you start the education loan loan.
Tax exemption under section 80G
If you give money to any organization as a donation which is entitled to tax exemption, then you can get tax exemption under section 80G of Income Tax Act. You can get 50 percent or 100 percent tax exemption in this way. It will depend on charitable organization. If you give a donation in excess of Rs 2,000, then you will not get tax exemption.
Some other options to save taxes for Salary Class Employees
People of the Salary class can claim all tax deductions under Section 10 (14) (I). Such as Uniform Allowances, Health Club Alliances, Telephone Alliances, Telephone and Internet Alternatives, Meal Bouquets, Professional Alternatives, Car Lease and Reimemberment Amounts etc., provided by your employer. Most of these come under the Alliance Section 10 14 (I).
When you take a loan, it is not that you can claim tax deduction only on the repayment of loan. You can claim tax deduction under Section 2 (28A), which can pay the loan processing fees to the bank.
On any loan, you can claim tax rebate under Section 24 of the interest payments up to Rs 2 lakh. In addition to tax saving on the principal amount for the hole loan, you can claim tax deduction under section 24.
You can claim up to 10 percent of your salary by investing in New Pension System, ie NPS, and tax deduction up to Rs 50,000 under 80 ccd. It is in addition to the tax deduction under the 80C of Rs 1.5 lakh.
Income Tax Saving Tips for Business Class
Tax exemption under Section 80C
Business man can claim tax deduction up to Rs 1.5 lakh under Section 80C of Income Tax Act. Business man can claim tax discounts by investing in PPF, ELSS Mutual Fund, NPS, Senior Citizen Savings Scheme, Tax Saving FD, Post Office Time Deposit. Apart from this, Life Insurance can claim tax rebates on premium, home loan repairs, property stamps and registration charges. If you have a daughter and her age is 10 years or less then you can also get tax deduction by depositing money in Sakuniya Prosperity Scheme. You can also claim tax exemption on tuition fee payment for children’s education. Under 80C, you can deduct tax on a total investment of 1.5 lakh rupees in a year.
Tax exemption under section 80CCC and Section 80CCD (I)
You can claim tax deduction up to Rs 1.5 lakh in a year by adding Section 80C, Section 80CCCC and Section 80CCD (I). If you have already used limit of Rs 1.5 lakh under 80C, then you can not use tax exemption option for investment in NPS under 80 CCC under Section 80CCD or Section 80CCD for Pension Plan. . You can get an extra tax of Rs 50,000 under Section 80CCD (1B) if you invest in NPS for the financial year 2017-18.
Tax exemption under Section 80D
If you make a health insurance premium of Rs 25,000 in the financial year 2017 18 for your family, or for the family, you can claim a tax exemption. If you are senior citizen, then you can claim tax deduction by paying health insurance premium up to Rs 30,000.
Tax exemption under Section 80GG
If you do not have a house and you live in a rented house then you can claim tax deduction under Section 80GG. Tax exemption will be minimum
- Rent Payment – 10 percent of total income
- 5000 per month
- 25 percent of total income
Tax exemption under Section 80DD
If you have a relative Divyanga and are dependent on you, then you can claim tax deduction under Section 80 DD for treatment. You can claim a tax exemption of up to Rs 75,000 in this case. If Divayang’s disability is more serious then tax exemption in such case can be up to Rs. 125,000.
Tax exemption under Section 80DDB
You can claim a maximum tax of 40,000 rupees for the treatment of a dependent family member under section 80 DDB. Senior citizen can get tax exemption on medical expenses up to Rs 60,000. At the same time, if someone is more than 80 years old then he can get a tax exemption in Mediclaim for up to Rs 80,000 in a year.
Tax exemption under section 80u
If a person is physically handicapped, then he can deduct tax on section 80U upto Rs 75,000. If the level of physical disability is high, then in this case tax exemption can be up to Rs. 125,000.
Tax exemption under section 80G
Under section 80G, you can claim tax rebate by giving money to charity or donation to an organization that is entitled to tax exemption. Tax exemptions can range from 50 percent to 100 percent.
Tax exemption under section 80E
If you have taken education loan for your Higher Education, Wife or Children, then you can claim tax rebate on interest under Section 80E. This tax exemption loan may be available till the beginning of 8th of the repayment.
Tax exemption under section 24
If you have bought a house with a home loan and you are living in it, then you can claim tax deduction up to Rs 2 lakh in a year on home loan interest. You can claim an additional tax deduction of Rs. 50,000 under section 80EE if you have taken loan to purchase the first property in FY 2017-18.
Tax exemption under section 80GGB
If you donate money to a registered political party, you can claim a tax exemption. But this donation should not be given in cash.
Tax exemption under Section 80RRB
If you are earning as a royalty on patent, you can claim a tax rebate of Rs. 3 lakh a year under section RRB.
Tax Exemption for Operation Expenses
If you are a freelancer, then you can get a tax exemption on business and work-related expenses. You can claim tax rebate on office rent and repairs, office supplies, internet bills, mobile bills, travel, entertainment and hospital expenses. To claim tax rebate on these expenses, you have to get the receipt for the expenditure.
Tax exemption on loss in business
If you have suffered losses due to any other business, stock trading or bad credit, then you can set off this loss against the profit set in your business. You can do this for the next 8 years. You can deduct commodity transaction tax, banking transaction tax, securities transaction tax before calculating tax liability.
Tax exemption on business loan
If you have taken a business loan to buy working capital, equipment or inventory, then you can claim tax rebate on the interest of the loan. You can also claim tax exemption on interest payments on the personal for business.
Tax exemption on impulse expenses
You can claim tax deduction on salary, or commission on the expenses of the imposition. These expenses are deducted from the business income before tax calculating.
Tax Exemption on Depository Assets
Business man uses laptops, furniture and gadgets in business. Such expenses are called Capital Expanses. The Businessman has the permission to charge the depreciation every year. How much tax exemption will be available for deprecation, depending on what kind of asset it is. The newly constructed wood structure in the office can be up to 100 percent depreciation.
Recommended
- Deduction for Rent Paid Under Section 80GG
- Advance for property – Is the perplexity over??
- Section 44AE of the Income Tax Act 1961
- Exemptions available under Sec. 80C for Stamp Duty Paid
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