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Income Tax Saving Tips For This Year

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Income Tax
Income Tax

Income Tax Saving Tips For This Year

Income Tax is the percentage of tax we pay to the government through the income we get, ie either through salaries we earn or through business we earn. The tax amount received is utilized in infrastructural development, salary payments to government and central government employees etc.

Income tax is applicable for individuals, businesses, corporate, and all other establishments that generate income. All taxes are levied based on the passing of a law, and the law that governs the provisions for our income tax is the Income Tax Act, 1961.

Either you be a salaried individual or a professional or a businessman, tax planning is an important part of a financial plan. With proper tax planning you can save taxes to certain extent.Before we go for Income Tax Saving tips it is important to know Income Tax Slab Rates for FY 2018-19 (AY 2019-20)

Income Tax Slab Rates for FY 2018-19 (AY 2019-20)

Income tax slab for individual (resident or non-resident) tax payers age less than 60 years:

Taxable income Tax Rate
Up to Rs. 2,50,000 Nil
Rs. 2,50,000 to Rs. 5,00,000 5%
Rs. 5,00,000 to Rs. 10,00,000 20%
Above Rs. 10,00,000 30%

Surcharge:
10% of tax where total income exceeds Rs. 50 lakh
15% of tax where total income exceeds Rs. 1 crore

Education cess:
3% of tax plus surcharge

Income tax slab for individual Senior Citizen (resident or non-resident) tax payers age between 60 – 80 years:

Taxable income Tax Rate
Up to Rs. 3,00,000 Nil
Rs. 3,00,000 – Rs. 5,00,000 5%
Rs. 5,00,000 – Rs. 10,00,000 20%
Above Rs. 10,00,000 30%

Surcharge:
10% of tax where total income exceeds Rs. 50 lakh
15% of tax where total income exceeds Rs. 1 crore

Education cess:
3% of tax plus surcharge

Income tax slab for individual Senior Citizen (resident or non-resident) tax payers age above 80 years and more:

Taxable income Tax Rate
Up to Rs. 5,00,000 Nil
Rs. 5,00,000 – Rs. 10,00,000 20%
Above Rs. 10,00,000 30%

Surcharge:
10% of tax where total income exceeds Rs. 50 lakh
15% of tax where total income exceeds Rs. 1 crore

Education cess:
3% of tax plus surcharge

Income Tax Rates for HUF / AOP / BOI / Any other Artificial Juridical Person:

Taxable income Tax Rate
Up to Rs. 2,50,000 Nil
Rs. 2,50,000 to Rs. 5,00,000 5%
Rs. 5,00,000 to Rs. 10,00,000 20%
Above Rs. 10,00,000 30%

Surcharge:
10% of tax where total income exceeds Rs. 50 lakh
15% of tax where total income exceeds Rs. 1 crore

Education cess:
3% of tax plus surcharge

Below Are Income Tax Deductions Sections Available For Your Taxable Amount :

Income Tax Deductions Under Section 80C
Under section 80C, a deduction of Rs 1,50,000 can be claimed from your total income, This deduction is allowed to an Individual or a HUF. Investments, expenditures that qualify for deduction from gross total income under Section 80C are

  • life Insurance Policies
  • Unit Linked Insurance Plan (ULIP)
  • Contribution to provident fund such as Employee Provident Fund (EPF)
  • Voluntary Provident Fund (VPF) or Public Provident Fund (PPF)
  • Investment in National Savings Certificate (NSC)
  • Investment in KVP
  • Senior Citizen Savings Scheme (SCSS)
  • 5-year Post Office Term deposits
  • 5-year bank fixed deposits (FD)
  • Sukanya Samriddhi Scheme
  • Children’s Tuition Fees
  • Repayment of Principal for Home Loan
  • Stamp Duty and Registration Charges for House Property

Income Tax Deductions Under Section 80CCC
Under section 80CCC a deduction of Rs 1,50,000 is allowed to an Individual or a HUF for amount paid or deposited in any annuity plan of LIC or any other insurer that pays pension or a periodical annuity. maximum total deduction available under all three sections 80C, 80CCC & 80CCD is 1,50,000.

Income Tax Deductions Under Section 80CCD
Under section 80CCC a deduction of Rs 1,50,000 is allowed to an Individual or a HUF for Contribution to Pension Account ie. EPF, NPS. maximum total deduction available under all three sections 80C, 80CCC & 80CCD is 1,50,000.

  • Section 80CCD (1) : Tax savings is allowed to an individual whose contributions made to notified pension scheme. 10% of the salary in case of an employee, or 20% of the gross total income in case of self-employed
  • Section 80CCD (1B) : An additional deduction of a maximum of Rs 50,000 from gross total income will be allowed to assessee, if he invests this in notified pension scheme like National Pension System, Atal Pension Yojana etc
  • Section 80CCD (2) : Tax deductions can be claimed by an individual if their employer make contribution to your NPS account as per section 80CCD (2). The employer’s contribution cannot exceed 10% of the employee’s salary

Income Tax Deductions Under Section 80D
Section 80D belongs to health related (health insurance). Under section 80D a deduction of Rs. 25,000 can be claimed for health insurance of self, spouse and dependent children. Maximum deduction of Rs.50,000 per year if you are a senior citizen.

For Parents below 60 years of age a deduction of Rs. 25,000 can be claimed for health insurance, If above 60 years of age a deduction of Rs. 50,000 can be claimed for health insurance.

An additional deduction of Rs.5,000 can be claimed every year on expenses related to health check-ups. This limit includes the check-up expenses of all members in a family, including spouse, kids and parents.

Income Tax Deductions Under Section 80DD
Under section 80DD tax deduction is available to an Individual or a HUF on medical expenses of disabled dependent. It is applicable if any dependent of tax payer is Handicapped / Disabled.

  • If disability is 40% or more but less than 80% a fixed deduction of Rs 75,000
  • If disability is 80% or more a fixed deduction of Rs 1,25,000

To claim this deduction a certificate of disability is required from prescribed medical authority. For individuals, a disabled dependent can be a spouse, child (son / daughter), parents, siblings (brother/sister). For HUFs, a disabled dependent can be any member of the HUF.

Income Tax Deductions Under Section 80DDB
Under section 80DDB tax deduction is available to an Individual or a HUF on medical expenses incurred on specified diseases. For individuals, can be self, spouse, child (son / daughter), parents, siblings (brother/sister). For HUFs can be any member of the HUF.

  • If any person below 60 years of age who underwent treatment can get a deduction of Rs. 40,000
  • If Senior citizen (60-80 years) who underwent treatment can get a deduction of Rs. 60,000
  • If Super senior citizen (above 80 years) who underwent treatment can get a deduction of Rs. 80,000

Income Tax Deductions Under Section 80E
Under section 80E tax deduction is available to an Individual on Interest towards Education Loan for Higher Studies. For individuals, can be self, spouse, child (son / daughter) or for the student of he/she is the legal guardian.

Income Tax Deductions Under Section 80EE
Under section 80EE tax deduction is available only to an individual who is a first time home-owner. under Section 80EE of Income Tax Act. You can claim income tax deduction on home loan interest paid. But the amount allowed for deduction is up to maximum Rs Rs 50,000 per financial year under this Section. The deductions can be claimed until you have fully repaid the loan. There is much more in this section, speak to your HR or any professional.

Income Tax Deductions Under Section 80RRB
Under section 80RRB tax Deductions with respect to income by way of royalties or patents can be claimed under this section. Income tax can be saved on an amount up to Rs.3,00,000 for patents registered under the Patents Act, 1970.

Royalty basically means the payment made to an owner for the use of property, especially patents, copyrights works, franchise etc.

Income Tax Deductions Under Section 80TTA
Section 80TTA refers to claim deduction on Interest on Bank Savings Deposit. The interest you receive on your savings bank account is considered as your income and therefore it is taxable.

Interest income earned from a savings account up to Rs. 10,000 is tax deductible from the gross income. Any interest earned over and above Rs. 10,000 is taxable ie., under this section maximum deduction allowed is Rs. 10,000.

Income Tax Deductions Under Section 80TTB
Section 80TTB refers to tax deduction of Interest on Deposits for Senior Citizens. Senior citizens investing in banks fixed deposits (FDs), recurring deposits (RDs), post-office deposits or even keeping money in savings account will save taxes. A deduction of Rs. 50,000 is allowed for Senior Citizens.

Income Tax Deductions Under Section 80U
Section 80U provide tax benefits to individuals with disabilities. An individual suffering from disability himself gets tax benefit under section 80U.

  • If disability is 40% or more but less than 80% a deduction of Rs 75,000 is allowed
  • If 80% or more in considerd as severe disability and a deduction of Rs 1,25,000 is allowed

Income Tax Deductions Under Section 80GG
Section 80GG provide tax benefits to individuals with disabilities. An individual suffering from disability himself gets tax benefit under section 80U.

Income Tax Deductions Under Section 80CCG
Under Section 80 CCG, a maximum deduction of Rs 25,000 per year, can be claimed by individual residents. Investments in equity savings schemes (ELLS) notified by the government are permitted for deductions, subject to the limit being 50 per cent of the amount invested.

Income Tax Deductions Under Section 80G
Under Section 80G you can get tax exemption for the charity, ie. donations for social cause. Donations qualify for either 50% or 100% tax deduction.

Income Tax Deductions Under Section 80GGB
Section 80GGB provides tax exemptions to the donations made by a company to any political parties or Electoral Trust. Cash contributions are not allowed, therefore amounts made by Cheque / draft / pay order / direct transfer to the account of political parties are promoted and accepted. Companies can contribute 7.5% of their average net profits of the past three financial years.

Income Tax Deductions Under Section 80GGC
Section 80GGB provides tax exemptions to the donations made by a person (individual) to any political parties or Electoral Trust. Cash contributions are not allowed, therefore amounts made by Cheque / draft / pay order / direct transfer to the account of political parties are promoted and accepted.

Tags : Income Tax Deductions List, Income Tax Exemptions, Save Income Tax, Income Tax Slab