In January, all employees start the tedious task of collecting investment proof and
submitting with the HR of the companies. If employees don’t submit the investment proof’s before the last date then the maximum tax as perincome tax slab will be deducted. Only option to reduce income tax liability is too submit the investment proofs on time. In this article we try to capture the various investment avenues where employees can save income tax and increase their take Home salary.
From 01st April 2013, PAN No of Landlord compulsory if Rent Exceeds Rs 1,00,000/- pa ( ie Rs 8333/- p.m).
Revenue stamp is required to be fixed on rent receipt.
Tax Saving Tip on HRA: You can pay rent to parents , Make sure that your parents the rental income in their total income while filing their income tax return.
Important Tax Tips: Preferred Investment option after EPF is Public Provident Fund due to low risk, tax free return and guaranteed return.
Tax Planning Tips:
1) Please ensure that medical insurance premium is paid in cheque / credit card. Cash payment is not allowed as deduction under section 80D.
2) Any preventative health check up amount paid upto Rs 5000/- for self/ Spouse/ child and parents ( This amount is within overall limit of Rs 15000/-)
Only an Individual can claim deduction under Section 80E for the Repayment of Interest on Home Loan provided that the Loan was taken for the Higher Education of Self or Spouse or Children or the Student of whom the Individual is the Legal Guardian.
The Salient features of claiming deduction under Section 80E are mentioned below.
For more details read Section 80G
Tax Tips for donation :Keep the donation receipt safely. Before taking benefit of section G make sure the institution to who you made the donation is eligible for 80G benefit.
Interest earned in Fixed deposit need to be added to your total income while calculating income tax liability.
Use our income tax calculator to calculate your income tax liability
Income Tax Tip on Interest:
1) Always declare interest in your total income and pay tax accordingly to avoid future problems
2) Before filing your income tax return always view your form 26as, and if any interest is shown or TDS deducted , then show the same in your Income tax return.
If house is self occupied: Limit for Interest on housing loan is Rs 1, 50,000/-
If house is rented: There is no limit on housing loan interest
Income Tax Tip : If you have two house property then, and any of the property is not let out ie vacant , then first one will be taken as self occupied and second property will be considered as rented out. In such case, notional rent need to added to your income.
Need Income Tax saving and investment proof advice visit www.IncomeTaxReturnIndia.com
submitting with the HR of the companies. If employees don’t submit the investment proof’s before the last date then the maximum tax as perincome tax slab will be deducted. Only option to reduce income tax liability is too submit the investment proofs on time. In this article we try to capture the various investment avenues where employees can save income tax and increase their take Home salary.
Income Tax Saving Option for salaried Employees
| Income tax saving option | Limit | Income tax Saved |
| HRA (House Rent Allwance | As per HRA rules | |
| Investment under section 80C | 100,000 | 30,900 |
| Medical Insurance under Section 80D – For self, Spouse and Children | 15,000 | 4,635 |
| Preventive Health Check up | 5,000 | 1,545 |
| Medical Insurance Under Section 80D – For Parents | 15,000 | 4,635 |
| Medical Insurance Under Section 80D – For Parents If senior Citizens | 5,000 | 1,545 |
| Medical treatment /contribution to scheme for maintenance of dependent with Disability – (Sec 80 DD) | ||
| Interest on Education Loan (Sec 80E) | ||
| Interest payable for First Residential Property (Section 80EE ) | ||
| Donations under Sec -80G | ||
| Additional Interest on housing loan Section 80 TTA | ||
| Housing loan and interest |
1) HRA (House Rent Allowance)
- Actual HRA received
- 50% / 40%(metro / non-metro) of basic ‘salary’
- Rent paid minus 10% of ‘salary’.
From 01st April 2013, PAN No of Landlord compulsory if Rent Exceeds Rs 1,00,000/- pa ( ie Rs 8333/- p.m).
Revenue stamp is required to be fixed on rent receipt.
Tax Saving Tip on HRA: You can pay rent to parents , Make sure that your parents the rental income in their total income while filing their income tax return.
2) Investment under section 80C
You can invest upto maximum of Rs 1 lac in section 80C. Depending on your income tax slab you can save tax upto Rs 30,900/- (if you fall in maximum income tax slab) You can invest in following schemes to avail the benefit.- Employees Provident Fund (EPF)
- Public Provident Fund (PPF)
- Life Insurance Premium
- Ulips
- Equity oriented funds
- Senior Citizens saving scheme
- NSC
- Housing loan Principal Repayment
Important Tax Tips: Preferred Investment option after EPF is Public Provident Fund due to low risk, tax free return and guaranteed return.
3) Medical Insurance Premium (Section 80D)
Premium Payment for Medical Insurance paid for self/ Spouse /children and parent is eligible under section 80D. Upto Rs 35000/- can be reduced from total income.- Rs 15000/- for medical insurance Premium paid for self / Spouse/ and children
- Rs 20000/- medical insurance Premium paid for Senior Citizen parents, if neither of parent is Senior Citizen ( ie above 60 years) then maximum deduction allowed is Rs 15000/- for parents.
Tax Planning Tips:
1) Please ensure that medical insurance premium is paid in cheque / credit card. Cash payment is not allowed as deduction under section 80D.
2) Any preventative health check up amount paid upto Rs 5000/- for self/ Spouse/ child and parents ( This amount is within overall limit of Rs 15000/-)
4) Deduction for Repayment of Interest on Education Loan (Section 80E )
If you’ve taken an Education Loan and are repaying the same, you can always claim deduction under Section 80E of the Income Tax Act for the Repayment of Interest on Education Loan. However, this deduction is only available to Individual and not to HUF.Only an Individual can claim deduction under Section 80E for the Repayment of Interest on Home Loan provided that the Loan was taken for the Higher Education of Self or Spouse or Children or the Student of whom the Individual is the Legal Guardian.
The Salient features of claiming deduction under Section 80E are mentioned below.
- The deduction allowed under Section 80E is only for the Repayment of Interest on Education Loan and not for the purpose of Repayment of Principal Amount of Education Loan.
- Deduction under Section 80E is over and above the Rs. 1,00,000 deduction allowed under Section 80C and there is no maximum limit for claiming this deduction under Section 80E.
- Deduction under Section 80E is allowed to be claimed in the year in which the Individual starts paying the Interest on Education Loan and in 7 succeeding years ie deduction is available for a maximum period of 8 years or until the Interest is repaid by the Individual in full (whichever is earlier).
5) Interest payable for First Residential Property (Section 80EE )
- You have bought a new house, and House cost of the house is maximum of Rs 40 lakhs Loan is approved and taken after 1-4-2013.
- Loan does not exceed Rs 25 Lakhs
- Then, the Extra interest deduction that you will get is Rs 1,00,000/- under section 80EE.
- This “temporary” scheme is for 1 year only.
- Benefit for section 80EE is available for fresh investment for “First time house buyers”
- For more details read Section 80EE
6) Donations under Sec -80G
You are making any donation to charitable institution/ Prime minister relief funds, etc help in saving income tax . Depending on the category of the institution donation made will help in reducing the total income.For more details read Section 80G
Tax Tips for donation :Keep the donation receipt safely. Before taking benefit of section G make sure the institution to who you made the donation is eligible for 80G benefit.
7) Interest on Saving Account Section 80 TTA
Section 80TTA allows for deduction of Rs 10,000/- for interest earned in saving account during the year. There is misconception that both interest ie saving interest and fixed term deposit interest is allowed as deduction. Please note only saving interest is allowed as deduction upto Rs 10,000/-.Interest earned in Fixed deposit need to be added to your total income while calculating income tax liability.
Use our income tax calculator to calculate your income tax liability
Income Tax Tip on Interest:
1) Always declare interest in your total income and pay tax accordingly to avoid future problems
2) Before filing your income tax return always view your form 26as, and if any interest is shown or TDS deducted , then show the same in your Income tax return.
8) Housing loan Interest and Principal Repayment
Principal paid is allowed as deduction under section 80C upto maximum of Rs 1 lac.If house is self occupied: Limit for Interest on housing loan is Rs 1, 50,000/-
If house is rented: There is no limit on housing loan interest
Income Tax Tip : If you have two house property then, and any of the property is not let out ie vacant , then first one will be taken as self occupied and second property will be considered as rented out. In such case, notional rent need to added to your income.
Need Income Tax saving and investment proof advice visit www.IncomeTaxReturnIndia.com
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