How to save tax on salary in India?

Tax

The tax saving season is knocking the door. Every single salaried individual are in search of legal and legitimate ways to save their tax. But most of the time we don’t have correct information as how to save tax on salary in India. Not to worry. Here we are giving 10 ways as how to save tax on salary in India.

  • NPS– It stands for National Pension System. To build a retirement corpus, you can keep your money in NPS with lock-in period until your retirement. NPS invest in debt and equity pension funds which offers tax deduction up to Rs. 50k under Section 80CCD(1B). It is one of the most common solution as how to save tax on salary in India.
  • Loan for higher education– You can demand tax deduction under Section 80E of Income Tax Act, on the interest amount that you pay on the loan for higher education. This tax deduction is valid for 8 years which begins from the loan repayment year. 
  • Savings Account– It is one of the most common solution to the question as how to save tax on salary in India. Not many of us know that, the interest earned on the savings up to Rs. 10,000 comes under tax deduction under Section 80TTA. 
  • Premium on Health Insurance– Under Section 80D, you enjoy tax deduction on health insurance premium.   It is the most common answer to the question as how to save tax on salary in India. You can avail up to Rs. 25,000 as tax deduction and Rs. 50,000 for health insurance premium for senior citizen. Moreover, if you pay premiums for both yourself and your senior citizen parents, you will enjoy tax deduction up to Rs. 75,000 per annum. 
  • Treatment on certain diseases– If you are suffering from certain diseases like- AIDS, Cancer etc. you tend to spend lot of money on its treatment. To help you in this situation, you will be offered tax deduction under the Section 80DDB up to Rs. 40,000. In case if you are a senior citizen, you will enjoy a tax deduction up to Rs. 60,000. This deduction will rise to Rs. 80,000, if you are a super senior citizen. 
  • Home Loan– The amount that you pay as interest on home loan is tax deductible up to Rs. 2 lakhs per annum under Section 24. So, the home loan interest is a great solution to as how to save tax on salary in India.
  • Tution Fees– If you are bearing huge expense of your child’s tution fees and is wondering as how to save tax on salary in India, then here is your solution. Under Section 80C, you will be benefitted tax deduction on your child’s tution fees of college, school or university.
  • House Renovation– While finding ways as how to save tax on salary in India, usually one miss out this particular point. If you take loan to reconstruct your house, the interest that you pay will be tax deductible under Section 24b up to Rs. 30,000.
  • Person with disability– If you are a person with a disability as recognized by the medical authority, you will enjoy tax deduction under Section 80U. The deduction will be Rs. 75,000 and will rise to Rs. 1,25,000 if you suffer from severe disability. 
  • HRA– If you are a salaried individual and stay in a rented flat, then the most easy way as how to save tax on salary in India is through HRA. House Rent Allowance or HRA helps you to get tax benefit.
  • LTA– As salaried individual, you are eligible for tax free travel allowance. Under Leave Travel Allowance or LTA, you get tax deductions on trip within India with your immediate family. Moreover the route of your trip must be the shortest one and this allowance is available for 2 times in 4 years time period.
  • Medical Allowance– If you are opting for a way as how to save tax on salary in India, then one of the way is through medical allowance, If you fall sick and produce the prescribed medical bills, you will enjoy tax-free medical allowance.
  • ELSS– If you invest in ELSS mutual fund with a lock-in period of 3 years, you will enjoy tax benefit up to Rs. 1 lakh and 10% on LTCG. ELSS investment is one of the best solution as how to save tax on salary in India.
  • Other tax saving Options– You can invest in other tax saving instruments like- PPF, Life insurance premium, tax-saver FDs, NSC, EPF, Sukanya Samriddhi Yojana  and Senior Citizens Saving Scheme in context to your concern as how to save tax on salary in India.
  • Charity– If you donate money for charity in NGOs, you will be benefited from tax exemption under Section 80G. But 100% tax deduction is not possible.
  • LTCG– One of the lesser known solution as how to save tax on salary in India. Under Section 54, if you sell a long-term asset, a house within 2 years of its purchase, you will enjoy tax benefit on the LTCG. Moreover, if the sold long-term asset is not a house,  then you enjoy tax deduction under Section 54F. 

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