I would like to flash on various tax saving schemes and concepts may helpful for assesses who are working under Employment for figure out the ways for tax planning.
I’m writing this article to provide the fair awareness for self tax planning. However, provisions may be change every financial year.
How to pay zero tax with high scale of salaried income around 10 lakhs/Year
Aright friends! Let us look in to the sources available for mitigation of tax liability up to Zero tax level with the legal approach.
Summary
Eligible deductions u/s 80C.
- Children tuition fees. No transport allowance / term fees is allowed as deduction.
- Amount deposited in Public Provident Fund. You can open PPF account with any post office / SBI / ICICI Bank etc.,
- Amount contributed towards the Employees Provident Fund (EPF)
- Post office term deposit for 5 years / Bank FD scheme of 5 years.
- National Saving Certifications (NSC) – 5 years and 10 years
- ELSS tax saving Mutual Funds.
- Senior Citizen Savings Scheme from post office / bank
- Principal repayment of Home Loan amount
- National Pension System / New Pension Scheme (NPS)
- Life Insurance Premium
- Amount deposited in Sukanya Samriddhi Account
Claim additional deductions under 80CCD towards NPS Rs 50,000
- Employees can contribute to New Pension Scheme / National Pension Scheme (NPS) up to 10% of their salary. In such case, an employee is eligible to claim additional Rs 50,000 tax benefits over and above 80C.
Employer contribution of NPS – Rs 100,000
- Employer can contribute up to 10% of your salary. This is a good way to claim tax exemption and get the highest interest rate with this safe investment scheme.
Claim interest on house property loan upto Rs 200,000
- If you have taken house loan, you are eligible to claim interest on home loan (which is termed as loss from house property) up to Rs 2 Lakhs. This is only interest from housing loan.
- Of course Interest is an additional burden to the assessee but it will be turned as secured investment on immovable property with the low rate of interest.
Exemption of Transport Allowance for Rs 19,200 per annum
- Transport allowance exemption has been increased to Rs 1,600 per month. And need not produce any evidence for claiming this exemption.
Exemption for Health insurance premium up to Rs 25,000 (self, Spouse & childrens)
- Deduction in respect of Medical Insurance Premium for Self and family members.( Maximum Deduction available Rs. 30,000/- for Senior Citizens and Rs. 25,000/- for others. )
Medical insurance premium for parents – Rs 30,000 (parents)
- Deduction in respect of Medical Insurance Premium for Parents (Father or mother or both).( Maximum Deduction available Rs. 30,000/- for Senior Citizens parents and Rs. 25,000/- in other cases. )
- However you have to look in to benefits from the availed scheme because total premium is the expense to assessee.
Medical allowance – Rs 15,000
- You can submit medical bills to your employer and claim upto Rs. 15,000 as medical allowance as part of your total compensation (CTC).
Leave Travel Allowance – Rs Actuals
- Tax rules provide for an exemption only in respect of two journeys performed in a block of four calendar years. The current block runs from 2014-17.
Tax Free Allowances / perquisites:Tax free allowances providing by employer to employee are hereunder.
Phone / Mobile expenses reimbursement – Rs 24,000
- Many employers are providing the reimbursement of phone and mobile bills. So I had considered the lower side 2000 per month
Meal Coupons / Sodexo coupons – Rs 12,000
- Many MNC companies are providing Sodexo coupons as part of their CTC structure. If you are not encashing such perquisites provided by your employers, you are losing the opportunity of deduction. The perquisite is tax free to the extent of Rs.50 per meal during the working hours. Practically as I had observed most of MNC companies are providing Rs 2,000 per month. Hence I have been considered Rs. 1000 per month lower side.
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