As recently highlighted by our Honorable Prime Minister that out of a total population of 130 crore people, only 1.5 crore pay income tax. Major reason for the same could be that India is a developing country and 93% of Indian households earn less than Rs. 2.5 lakh annually, which is the minimum threshold limit for taxable income. Furthermore, agricultural income is entirely exempt from tax even when it crosses this Rs. 2.5 lakh limit. Hence, anyone who earns a taxable income should be proud to be a part of the tax-paying population.
In India, a person can legitimately save his income taxes by investing his money in the popular tax savings options.
Section Investments Exemption Limit
80C Investments in PPF, PF, insurance, NPS, ELSS, etc. 150,000
80CCD NPS investments 50,000
80D Investment in medical insurance for self or parents 25,000
80EE Interest on Home loan 50,000
80EEA Interest on Home loan 1,50,000
80EEB Interest on electric vehicle loan 1,50,000
80E Interest on education loan No Limit
24 Interest paid on the home loan 200,000
10(13A) House Rent Allowance (HRA) As per salary structure
1.One can invest and claim Rs. 1.5 lakhs under Section 80C in the options like PPF, NPS, EPF, Life insurance policy premium, tax-saving mutual funds (ELSS), Sukanya Samriddhi Yojana, children’s tuition fees, Tax saver FD and housing loan principal payments etc.
2.You can claim deduction up to Rs. 2 lakh for the interest component paid by you on the home loan for Self occupied property under section 24 of the Income from house property. You can also claim deduction upto Rs 50,000 on Home Loan Interest under Section 80EE.
3.You can avail a benefit of Rs. 25,000 for the health insurance premium paid for yourself, your spouse and your dependent children under section 80D. In addition to it, you can also insure your parent’s health and claim an additional benefit of Rs. 25,000 under the same section 80D. This deduction limit is Rs 50,000 if your parents are senior citizens. Similarly, there are many tax savings options available under different sections of the Income Tax Act.
Apart from the 80C deductions, there are various deductions under Section 80 you can use to save on income tax. Tax benefits on health insurance premiums and home loan interest are a few.
While the government expects you to pay income tax, it also allows you to legally save on income tax. You don’t have to pay income tax if you earn less than Basic exemption(Rs. 2.5 lakh) in a year. No matter how much taxable income you earn, there are certain exemptions and deductions available to all individual and HUF taxpayers that can be used to save their income tax.
While planning your investment, you should always remember that not all sorts of tax savers are the same in terms of assets class. You should be cautious while choosing the instrument that best suits your needs. If you are choosing tax saving investment options, make sure you select the one that aligns the best with your financial objectives and liquidity needs.
What are you waiting for? You can avail Many more Tax Saving Benefits with the help of our experts at Entrepreneurly.in before 30 September, 2020 for FY 2018-19. Contact Us Now for Complete Guidance FREE OF COST for Tax Planning/Tax Filing Needs!
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