Tax planning is required to save tax. This becomes more important for those who earn from salary. The expenses of the salary earners are such that they do not think seriously about tax planning.
Tax planning is a great thing. This planning is such that with a little effort a huge amount can be saved. Let us know that if a person has an income of 16 lakhs from salary, then how can he save tax on this income. Suppose Himanshu works in a big company whose total income from salary is Rs 16 lakhs. I
t is often seen that the people of the salary class are troubled by the expenditure and they are not able to do tax planning. In such a situation, what should Himanshu plan about his tax so that no tax has to be paid on the income from salary.
Salaried people on such earnings are exempted from standard deduction of Rs 50,000, with the help of which Himanshu can save Rs 50,000. In this way, now their total amount becomes Rs 15,50,000 on which tax will be calculated.
Himanshu can save tax on house property. If you have taken a home loan and are paying interest on it, then you can take a tax exemption of Rs 2 lakh. In this way, the total amount coming under Himanshu’s tax has now come down to Rs 13,50,000. After this Himanshu can take advantage of various deductions under section 6A.
How much money can be saved in section 80C
You can save tax on different investments under section 80C only under section 6A. If you invest in LIC, 5 year FD, PPF, PF, principal repayment of home loan, etc., you can save tax up to Rs 1.5 lakh every year.
In this way Himanshu’s total income will now be Rs 12,00,000 in the tax net. Also, if Himanshu invests in National Pension Scheme or NPS, he can save Rs 50,000 under section 80CCD. Now the total income has become Rs 11,50,000. After this, a savings of Rs 25,000 can be made under section 80D.
This is a discount on medical insurance. This will bring the total income tax net to Rs 10,75,000. If Himanshu pays the premium for medical insurance for his elderly parents, then he can avail an additional tax deduction of Rs 50,000 which is available only under section 80D. Now the total income becomes Rs 10,25,000.
Savings in section 80D
If Himanshu pays for preventive health checkup, then he can claim Rs 5,000 under section 80D. You can spend this for yourself, for the parents or for your children. Apart from this, if Himanshu spends on the treatment or care of a disabled dependent in his family, then he can get an additional tax exemption of Rs 1,25,000 under section 80DD.
In this way, Rs 8,95,000 will now come under the tax net. 100000 can be saved for any specified disease under section 80DDB. If Himanshu has taken a home loan and it is between 1st April 2019 to 31st March 2020, then he will get a deduction of Rs 2 lakh under section 80EEA. In this way, now only Rs 5,95,000 will come under the tax net.
If Himanshu pays interest on the education loan, he can save up to Rs 1.5 lakh. If they take an education loan of 15 lakhs, then 10 percent of the total amount can be taken as tax exemption.
In this way the total amount has now come down to Rs 4,45,000. Under section 80G, if someone makes a donation of up to Rs 90,000, then he can get a tax exemption of 50% of this i.e. Rs 45,000. This brought Himanshu’s total amount to Rs 4,00,000.
Now Himanshu will get a tax of Rs 12500 on his earning of 4 lakhs, which he can equalize under section 87A. In this way their entire tax liability becomes zero.
