Top 10 Income Tax saving tips for the salaried class as March 2019 approaches

Don’t want to pinch your pockets by paying taxes, here are some things to keep in mind to plan and save your taxes. Also, you may declare the below details to HR department in order to prevent Tax deduction from Salary. Even in case, you have missed to declare the same but have made following investments before 31st March, you shall be eligible to credit of taxes excess paid.

1) Public Provident Fund (PPF)

Most commonly used tax planning tool is depositing money in a PPF Account with a Nationalised Bank. It has gained popularity primarily because of ease in making Tax savings. Under section 80C of The Income Tax Act, a deduction is allowed to be made upto Rs 1.5 Lakhs from Gross Total Income (GTI) of a person where a deposit is made in a PPF Account. There is a minimum lock in period of 15 Years for the money to be withdrawn. Interest rates are announced by the Government on regular basis, presently yielding 8% effective from 1st January 2019.

Though there is a lock in period of 15 Years, loan may be availed with incremental 2% cost. However, after completion of 7 years, partial withdrawal of funds is permitted instead of a Loan.

To keep the account operative a minimum deposit of Rs 500 per year is required to be made. In case of default, the account becomes Inactive. To activate the account, a penalty of Rs 50 per year for the number of years defaulted along with the principal amount of Rs 500 per year is required to be deposited.

2) Tax Saving Time Deposits

In the present Investment scenario in time deposits (TD) of one-year, two-year and three-year maturity periods fetch an interest of around 7 per cent. Five-year Time Deposit offers a return of around 7.8 per cent. The interest is payable annually but calculated quarterly. The investment under 5-year TD qualifies for the benefit of Section 80C of the Income Tax Act, 1961 (Max up to 1.5 Lakh subject to 80C unutilised limit).

3) Equity Linked Savings Scheme

CA Chirag Bhandari from TaXtra Consultants says, “Investment in Equity Linked Savings Scheme (‘ELSS’) qualifies for a deduction of INR 1.5 lakhs under section 80C of the Income-tax Act (‘Act’).”

“ELSS are tax saving mutual funds wherein majority of the funds are invested in equities. ELSS has a lock-in period of 3 years which is among the lowest as compared to other tax saving schemes and generally offers higher returns on investment in rising market.”

4) National Pension Scheme

CA Chirag Bhandari also suggests to make investments in the National Pension Scheme (‘NPS’). “NPS qualifies for an additional deduction of Rs 50,000 under section 80CCD (1B) of the Act over and above the deduction of Rs 1.5 lakh allowed under section 80C of the Act.” “This deduction is available to all individuals whether salaried or self-employed. NPS is a social security initiative by the Central Government which is essential tool for individuals working in the private sector and requires a regular pension after retirement.”

5) Interest on Education Loan

CA Pankaj Jain from TaXtra Consultants advises taking advantage of Educational Loan repayment. He says, “If you have taken loan from any bank / financial institution or any approved charitable institutions for higher education in India or outside India for yourself, spouse or children and are repaying the same, then the interest paid on that loan is allowed as a deduction from the total income under section 80E of the Act.”

He says, “The deduction is available only for 8 years starting from the year in which you start repaying the loan or until the interest is fully repaid, whichever is earlier.” “Also, there is no limit on the maximum amount that is allowed as deduction.”

6) Health Insurance

Section 80D permits a deduction for the amount of insurance premium paid by the assessee. An individual may avail deduction for health insurance premium paid for self or family (also parents separately) or any payment made on account of preventive health checkup for an amount up to Rs 25,000.

Also, medical expenditure for self or family (also parents separately) incurred up to Rs 30,000 may be claimed. A cap on account of Preventive health checkup is Rs 5000 if incurred by the assessee.

7) Home Loan Repayment

Where you are repaying a Home Loan, deduction towards principal amount is allowed subject to section 80C limit of Rs 1.5 Lakh. Also, interest paid is also allowed under section 24(b) to the extent of Rs 30,000 or Rs 2,00,000 as per conditions mentioned therein.

8) House Rent Allowance

Where an assessee incurs expenditure on account of Rent for accommodation, the amount paid subject to location of the accommodation and subject to rules framed under the Act shall be allowed as exemption under section 10(13A) of the Act.

9) Medical Bills/ other reimbursements forming part of CTC

Where CTC of the assessee includes components towards reimbursement of medical bills, lunch, etc. the same may be claimed as a reduction towards arriving at tax amount after submitting the bills for the same.

10) National Savings Certificate (NSC)

Presently,NSC fetches an interest rate of 8 per cent per annum and deposits under it also qualify for deduction under Section 80C of the Income Tax Act. This interest is compounded annually but payable at maturity. This is also considered as an easy tool for Tax Savings.

(For all the latest News, Mumbai, Entertainment, Cricket, Business and Featured News updates, visit Free Press Journal. Also, follow us on Twitter and Instagram and do like our Facebook page for continuous updates on the go)

Free Press Journal