The financial year 2018-19 has ended and the individuals having gross total income exceeding the taxable limit must have filed an ITR on or before the due date. Especially the salaried individuals in our country, who are the largest taxpayers to the government, have to plan their tax saving financial decisions beforehand. The tax planning during the financial year allows the taxpayers to take the best use of the various tax exemptions, deductions, and allowances available under the Income Tax Act, 1961. As the financial year, 2018-19 ends, the salaried individuals must have taken the advantage of tax planning by making the investments in different financial products or taking a home loan or education loan etc.
But still there may be many of us who are not aware of the ways to save the tax avail the benefits offered by the government. The best ways for salaried individuals that can be adopted for tax planning can help to save tax and also can help in increasing the investment corpus says Gaurav Gaur, CEO and Founder, mudrahome.com.
Additional reading: Less Known Facts To Save On Taxes
Following are few ways to understand the eligible tax benefits:-
- A standard deduction of ₹ 40000/- is available to any salaried employee who receives his salary in cash or in his/her account.
- The salaried employee can avail the benefit of HRA (depending on the company’s compliance) if he/ she lives in a rented accommodation. The least of the following is allowed as the HRA exemption:
- Total HRA received in that particular financial year.
- Rent paid for the accommodation should be less than 10 percent of (Basic salary +DA).
- 40 percent of salary (Basic + DA) for non-metro cities and 50 percent of salary (Basic + DA) for metro cities can be represented for the exemption.
- The salaried employee can also get the benefit of LTA (in government organisations) and is restricted to domestic travel expenses incurred by the employee and it’s family. LTA is allowed only for two travels in the block of four years.
- A deduction of ₹ 2 Lakhs can be claimed by the Home-owners for interest paid towards the home loan for the self-occupied property and deduction of the complete interest on home loan for the let out property.
Know More About: Tax Benefits Of Home Loan
- An additional amount of ₹ 50,000 can be claimed as a deduction on the interest paid towards the home loan is also provided when the loan do not exceed for more than ₹ 35 lakhs and the value of the property is not more than ₹ 50 lakhs. There is also a condition of owning it as a first property, this means that the individual should not have any other property registered under his name at the time the loan is sanctioned and the loan should have been sanctioned between that particular financial year.
- After calculating your taxable income after considering the above-said points, the borrower can claim the tax exemptions under Section 80C, 80CCC and 80CCD(1) up to the maximum amount of ₹ 1.5 lakhs which includes:
- Tax saving Mutual funds
- Employee provident fund
- Tuition fees of the children
- Life insurance premium
- Equity Linked Savings Scheme (ELSS)
- Annuity/ Pension Schemes
- Payment made towards the principal amount of housing loans
- Fixed Deposit
- National saving certificate (NSC)
- Deposit in Post Office
- Contribution to PPF Account
- The amount deposited in Sukanya Samridhi Account
- National Pension Scheme
- Buying a health insurance for you and your family can also help to save tax as a deduction under Section 80D of ₹ 25,000 is available for insurance of self, spouse and dependent children.
- An additional deduction for insurance is provided when the insurance is taken for parents and is available for ₹ 25,000 if the parents are up to the age of 60 years and ₹ 50,000 if the parents are more than the age of 60 years.
- In case, the age of the taxpayers and the parents age is 60 years or above, the maximum deduction available under this section can go to the extent of ₹ 100,000.
- There is also a section 80TTA of IT Act that allows the bank interest earned up to Rs. 10000 in saving account can also be claimed as a deduction.