Under Section 80C of Income Tax, you can get deduction by investing Rs 1.5 lakh annually. Section 80C covers life insurance premium, PPF, tax saving schemes of mutual funds, PPF, tuition fee for two children, principal of home loan, etc.
If your annual income from the job is up to Rs 10 lakh, then you do not need to worry about income tax. You can save full tax. Just for this you have to do some tax planning. The new financial year has started from 1st April. So if you want to save tax then there is full time for you to plan and execute it. We are telling you what you need to do to save tax.
There are many rules and provisions of income tax which give you the facility of tax deduction. Among these, section 80C is the most popular. Thereafter, section 80CCD(1B), housing loan or education loan and health policy help you save tax. If you are ready to take full advantage of the above rules of income tax, then you will not need to pay tax on income up to Rs 10 lakh.
Advantages of Standard Deduction
The government gives the benefit of standard deduction to the people who get jobs or pension. At present, you get a standard deduction of Rs 50,000 on your total income in a financial year. Its benefit is available to all the employed taxpayers. Thus, if your annual income is Rs 10,00,000, your income after standard deduction will be Rs 9.5 lakh.
section 80c
Under Section 80C of Income Tax, you can get deduction by investing Rs 1.5 lakh annually. Section 80C covers life insurance premium, PPF, tax saving scheme of mutual funds, PPF, tuition fee of two children, principal of home loan, etc. If you take full advantage of this section, then your taxable income will come down to Rs.8 lakh (after deducting Rs.1.5 lakh after standard deduction).
Tax Deduction on National Pension Scheme
An additional deduction of Rs 50,000 per annum can be claimed on investment in the National Pension Scheme under Section 80CCD (1B) of Income Tax. This means that under this section you can get an additional deduction of up to Rs 50,000 in a financial year. In this way, after deducting 50 thousand rupees from 8 lakh rupees, your income becomes 7.5 lakh rupees.
tax exemption on home loan
Tax exemption is available on home loan. So if you want to reduce your tax, you can take advantage of the deduction available on the home loan. If you claim deduction of up to Rs 2 lakh on home loan interest in a financial year, deducting Rs 2 lakh from Rs 7.5 lakh, your income comes to Rs 5.5 lakh.
Tax exemption on health policy
Income tax deduction is available on purchase of health policy. You can claim a deduction of Rs 25,000 annually by purchasing a health policy for yourself and your family. If you buy a health policy for your elderly parents, you get an additional deduction of Rs 50,000 annually. After deducting Rs 75,000 from your income of Rs 5.5 lakh, your annual income becomes Rs 4.75 lakh.
As per the Income Tax rules, if your taxable income is less than Rs 5 lakh, your tax becomes zero. Under Section 87A of Income Tax, income below Rs 5 lakh is not taxable. In this way, you can reduce your tax to zero on salary up to Rs 10 lakh.
