Save for Income Tax – In this article, we will understand on how to save income tax on salary in India by leveraging the different sections that are available to us. This is only for those who follow old tax regime
Introduction
Instead of looking at the what sections are present and the instruments in it. I will explain how I save my salary for tax purposes. I just touch based on all eligible sections to their maximum limit
Save for Income Tax – Section 80 C bucket
Below are the instruments where 80 C bucket of rupees 1,50,000 gets filled
- Provident Fund – As per your Basic
- Public Provident Fund
- Sukanya Samriddhi Scheme
- Life Insurance
| Instrument | Amount Invested per Year (Rupees) |
|---|---|
| Public Provident Fund | 500 |
| Sukanya Samriddhi Scheme | 1,00,000 |
| Life Insurance (Endowment Plan) | 50,000 |
All put together my investments in this is more than rupees 1,50,000.
Save for Income Tax – Section 80 CCB bucket
There is only one instrument in this which is, National Pension Scheme (NPS). Here I invest rupees 50,000 which is the upper limit for this section
Save for Income Tax – Section 80 D bucket
In this section, I leveraged the below instruments
- Personal Health Insurance
- Parents Health Insurance
| Instrument | Amount Invested per Year (Rupees) |
|---|---|
| Personal Health Insurance | 15,000 |
| Parents Health Insurance | 35,000 |
House Rent Allowance
I leveraged this deduction as per my salary structure. This varies from person to person, hence not putting any number here.
Other
There are lot of instruments as well for us to save the Tax. As an example, my home loan eligibility hasn’t started right now as the house is under construction. Like wise, there will be other options as well as per individual which can be checked out here – https://www.bankbazaar.com/tax/save-money-on-tax.html
Conclusion
Simple formula will be assess all the sections, and see what applies to you and then leverage the maximum potential in that section.
Now that we have seen the above, Check out this relevant article which can be of interest to you – Budgeting your salary