Tax and Salary
Planning
As we know that our income for tax is
calculated from April to March but for government employ the salary of March is
not counted as March salary is paid in April every year. Every individual must
do the home work to save the income from tax but be sure to save income tax we
should not waste the money in name of investment. The Income Tax Act offers
many more incentives and
allowances, apart from the popular 80C, which could reduce tax liability
substantially for the salaried individuals. Let us discuss the option to save
the tax:
Utilizing Section 80C
Section
80C offers a maximum deduction of up to R 1,00,000. Utilize this section to the fullest by investing in any of the
available investment options.
A few of the options are as follows: Public
·
Provident Fund
·
Life Insurance
Premium
·
National
Savings Certificate Equity Linked Savings Scheme
·
5 year fixed
deposits with banks and post office
·
Tuition fees
paid for children's education, up to a maximum of 2 Children
c Other option
If you
have exhausted your limit of R 1,00,000 under section 80C, here
are a
few more options:
Section 80D –
Deduction of R 15,000 for
medical insurance of self, spouse and dependent children and R 20,000 for
medical insurance of parents above 65 years
Section 80G- Donations to
specified funds or charitable institutions.
House
Rent Allowance (HRA)
Are
you paying rent, yet not receiving any HRA from your company? The
least of the following could be claimed under
Section 80GG:
25 per
cent of the total income or
R
2,000 per month or
Excess
of rent paid over 10 per cent of total income
This deduction will
however not be allowed, if you, your spouse or minor child owns a residential accommodation
in the location where you reside or
perform office duties.
If HRA
forms part of your salary, then the minimum of the following three
is available as exemption:
·
The actual HRA
received from your employer.
· The actual
rent paid by you for the house, minus 10 per cent of your salary (this includes basic
dearness allowance, if any)
·
50 per cent of
your basic salary (for a metro) or 40 per cent of your basic
salary (for non-metro).
(Section
24) Tax Saving from Home Loans
Use
your home loan efficiently to save more tax. The principal
component
of your loan, is included under Section 80C, offering a
deduction
up to R 1,00,000. The interest portion offers a deduction up to
R
1,50,000 separately under Section 24.
Leave Travel Allowance
Use
your Leave Travel Allowance for your holidays, which is available
twice
in a block of four years. In case you have been unable to claim the
benefit
in a particular four- year block, you could now carry forward one
journey
to the succeeding block and claim it in the first calendar year of
that
block. Thus, you may be eligible for three exemptions in that block.
Tax on Bonus
A
bonus from your employer is fully taxable in the year in which you
receive
it. However request your employer for the following:
If you
anticipate tax rates to be reduced or slabs to be modified in
the
subsequent year, see if you could push the bonus payment to the
subsequent
year.
So if
you are a salary class than you can save:
80C - Rs 100000/-
·
Section 24 – RS
150000/- Home loan interest
·
HRA Full but
you have to give PAN number of House Owner if total rent cross one lakh in a
financial year.
·
Section 80D –
Deduction of Rs 15,000 for medical insurance
Comment below your query
if any,
Tag: income tax, saving
2014, Financial year 2013-2014, Section 80c, Saving tax options
