Income Tax News: Tax planning becomes essential for people in India whose salaries exceed 20 lakhs in order to maximise savings and minimise tax liabilities. For those in this income range, the following are some practical ways to reduce taxes:
Utilize Section 80C Deductions
Invest in tax-saving options to claim deductions of up to Rs. 1.5 lakhs annually, such as tax-saving fixed deposits, National Savings Certificates (NSC), Public Provident Funds (PPF), and Equity Linked Savings Schemes (ELSS).
Opt for Health Insurance
You can save tax under Section 80D of the Income Tax Act by purchasing a comprehensive health insurance coverage for yourself and your family. A person may deduct up to Rs. 25,000 for themselves, their family, and their parents, plus an extra Rs. 25,000 (or Rs. 50,000 if their parents are senior citizens).
Utilize Section 80E for Education Loan Interest
Should you have obtained an education loan for postsecondary study, Section 80E allows you to deduct the interest paid on the loan. The deduction amount has no upper limit and may be claimed for a maximum of eight years.
Maximize House Rent Allowance (HRA) Exemption
You are eligible to claim exemptions on the rent you pay if you are a salaried individual getting HRA as part of your compensation. To receive this benefit, send in rent receipts along with any other required paperwork.
Consider Investing in NPS
You can reduce your additional tax burden by making contributions to the National Pension System (NPS). Within the entire Rs. 1.5 lakhs limit under Section 80C, contributions of up to 10% of salary (basic + DA) are eligible for deduction under Section 80CCD(1). Section 80CCD allows for an extra deduction of up to Rs. 50,000 (1B).
Utilize Leave Travel Allowance (LTA)
Arrange your vacation and submit a claim for LTA exemptions for any domestic travel expenses you and your family may incur. Don’t forget to save any pertinent travel documentation and evidence for validation.
Review Your Salary Structure
To reduce your tax liability, choose tax-efficient pay components including bonuses, allowances, and reimbursements.
People making more than 20 lakhs per year can maximise their savings and minimise their tax bill by carefully employing these tax-saving measures.
