Know in What Ways You Can Save Tax in India


Know in What Ways You Can Save Tax in India

Are You Thinking about How to Save Income Tax from Salary?

Paying taxes is the duty of every Indian citizen. The government utilizes the tax that you pay for providing facilities that are used by the country’s public. As per the Income Tax Department of India, only 1.46 crore people have paid income tax in the financial year 2018-2019. Nearly Rs. 11.17 lakh crore has been produced as revenue from the tax payment. The Central Board of Direct Taxes (CBDT) has simplified the tax collection. It is the responsibility of individuals to pay taxes if their income is in the taxable bracket. It is also important for individuals to know how to save tax in India. With the help of the tax-saving provisions, they can grow their savings. It is necessary to know about the tax slab that will give you a fair idea of how to save on tax in India and the best way to save tax in India.

The various income tax slabs mentioned below as per the latest Income Tax Slab for the annual year 2020-21.

Total Income Tax Rate and cess
Up to 2.5 lakhs Nil
Rs. 2,50,001-5,00,000 5% of(Total income above 2.5 lakhs)+4% cess
Rs. 5,00,000-7,50,000 10%(Total income above 5 lakhs)+4% cess
Rs. 7,50,001-10,00,000 15%(Total income above 7.5 lakhs)+4% cess
Rs. 10,00,001-12,50,000 20%(Total income above 10 lakhs)+4% cess
Rs. 12,50,001-15,00,000 25%(Total income above 12.5 lakhs)+4% cess
Above 15,00,000 30%(Total income above 15 lakhs)+4% cess

There is an additional cess at 4% of the total tax payable that is imposed. There is a surcharge of 10% of the total income paid by individuals earning more than 50 lakhs annually. The Central Government has made various provisions as per the Income Tax Act, 1961, to reduce the monetary burden.

How can Salaried Individuals Save Tax?

Most of you tend to invest in different products that can burden you financially. To reduce this burden, the government also helps in the form of income tax waivers on direct taxes that are levied on the total salary. If you are thinking about how to save tax on salary, then you can opt for a home loan and avail of the tax benefits as per Section 80C. Getting a home loan comes with dual benefits as it reduces tax liability, apart from giving the relaxation of having your own home. Many housing schemes make housing affordable, while Section 80C reduces financial liability by reducing the tax burden and is one of the best tax saving options for salaried.

With the help of a home loan, you can lower the taxable income as a significant part of the home loan is claimed under Section 80C, which is up to 1.5 lakhs. If you want to know how to save tax on your salary, the above-mentioned tax-saving instrument would be helpful. But how to save tax other than 80c? Some of the other income taxes saving options are as follows:

Covered Individuals Deductions Under Section 80D
Health Insurance for individuals, spouse, and children (Below the age of 60 years) Upto Rs. 25,000
For individuals and parents(Below the age of 60 years) Upto Rs. 50,000
For individuals and senior citizen parents Upto Rs. 75,000
For individuals and parents(Both above the age of 60 years) Upto Rs. 1,00,000

Opt for Health Insurance: Considering medical inflation and increased health insurance, having medical insurance is of utmost importance. These policies lower the financial burden at the time of the medical crisis. You can also claim tax deductions on the premium under Section 80D of the Income Tax Act, 1961. For people above the age of 60, the limit has been increased to Rs.50000.

Engage in Investments: Investing in capital markets and schemes administered by the government can help you in creating wealth and also helps in saving tax. You can also choose to prefer tax benefit investment tools such as Equity Linked Savings Scheme (ELSS). Apart from this, you can also invest in 5-year fixed deposit to avail tax exemption benefits without any risk. Investments of up to 1.5 lakhs can be claimed under Section 80C.

Invest Your Money in Government Schemes: The government administers many schemes that offer high returns on investments apart from tax waivers. You can avail of tax exemptions by investing in the following schemes under Section 80C of the Income Tax Act:

a) Senior Citizens Savings Scheme(SCSS)

b) National Pension Scheme(NPS)

c) Public Provident Fund (PPF)

Make Donation to Charity: You can avail of a tax deduction on charitable donations. There is no upper limit applicable, but there are rules that decrease the amount of tax deduction on the charitable contributions. Donations for specific organisations in the form of cash amounting to Rs. 2000 are allowed under Section 80G of the Income Tax Act. For making donations to NGOs, the limit is 50% of the donated amount and up to 10% of the total income.

>>Read All About E-filing of Income Tax Return

To Sum Up

The best time to start saving tax is the beginning of the annual year. Most people delay it until the end of the last quarter of the year, which is not good practice. If you plan at the beginning of the year, tax-saving investments can help you achieve your goals. It is essential to start tax–saving before 31st March and file your returns within due time.

Hope these smart tips will help you in saving more tax.

Disclaimer: The above information is for reference purposes only. The tax exemptions are subject to the rules and regulations of the Income Tax Act of India 1961.

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