How to save tax in FY 2016-17?

The 2017 Budget will be presented on Wednesday and as always there is a lot of expectation tax payers have from this Budget. Only time can tell whether this budget will lower your taxes.

But now is the time to plan your tax saving investments if you haven’t already done so.

Let’s look at how some tax planning, can help you save your hard earned money in taxes.

In this article, we will be explaining as to how you can easily save tax as high as Rs 83,430 by simply taking advantage of some of the deductions allowed under income tax act.

 Section Maximum deduction Allowed Max Tax saving for a 30% bracket
80C Rs 1,50,000  Rs 46,350
80D Rs 60,000  Rs 18,540
80TTA Rs 10,000  Rs 3090
80CCD(1B) Rs 50,000 Rs 15,450
TOTAL   Rs 83,430

So we can see that by using the above deductions, you can save your lot of tax. Now let’s understand what these deductions are all about.

80C- This deduction saves the major amount of tax .The various investment options or expenses that can be claimed under this are: (read in detail here)

  • PPF (Public Provident Fund)
  • EPF(Employees Provident Fund)
  • Five year Bank or Post office tax saving deposit
  • NSC(National saving certificate)
  • ELSS (Equity linked Saving scheme)
  • Children Tuition fees
  • Post office senior citizen savings scheme
  • Life Insurance Premium
  • Principal Repayment of Home Loan
  • National Pension Scheme.
  • Sukanya Samridhi Account deposit Scheme

80 DThis section is related to Health Insurance premium paid. Deduction of Rs 25,000 is allowed for self, spouse and dependent children. Additional deduction of Rs 25,000 is given for parents. This limit is also is also increased to Rs 30,000, if any of the parent is 60 yrs or more. Thus it makes a total maximum limit of Rs 50,000. We have a detailed post here that explains how to claim this deduction.

80 TTA This section allows the deduction for savings account interest with banks, cooperative banks and post office. The maximum limit is Rs 10,000.

80CCD (1B) This section allows the additional deduction up to Rs 50,000 for the contribution made towards the NPS (National Pension Scheme).

 

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