How can I reduce my taxable income?
Save Income Tax on Salary
- Deductions under Section 80C, Section 80CCC and Section 80CCD. Citizens of India can save tax under these 3 sections. …
- Medical Expenses. …
- Home Loan. …
- Education Loan. …
- Shares and Mutual Funds. …
- Long Term Capital Gains. …
- Sale of Equity Shares. …
How do I structure my salary to save tax?
Employee Contribution to Provident Fund (EPF): EPF is a very good tax-saving and investment scheme. The amount of EPF is tax-free up to 12% of basic salary. National Pension System (NPS):NPS is also a long term tax saving investment and up to 10% of salary will exempt from income tax if invested in NPS.
What are the salary components that help employees to reduce their tax burden?
There are various elements that you can make use of to reduce the burden of taxation during the end of a financial year. Some of these elements are provident fund, Housing Rent Allowance (HRA), free of cost meals, and telephone bill reimbursement.
How can I reduce my monthly tax on my salary?
How to Save Tax on Salary in India?
- Total annual income spent towards repayment of the principal borrowed amount is eligible for deductions of up to ₹1.5 Lakh under Section 80C.
- Tax exemption on interest section of the home loan is available under Section 24(b), valued up to ₹2 Lakh annually.
What income is tax free?
Applicable for all individual tax payers:
Rebate of up to Rs 12,500 is available under section 87A under both tax regimes. Thus, no income tax is payable for total taxable income up to Rs 5 lakh in both regimes. Rebate under section 87A is not available for NRIs and Hindu Undivided Families (HUF)
In which month tax is deducted from salary?
Tax deducted at source (TDS) on salary
During June or July or every year, your employer will provide you a TDS certificate with details of tax deducted and submitted to the tax department. This certificate is known as Form 16.
Is having higher basic salary good?
“Generally, a higher basic pay enhances the tax exemption limit for HRA. It also increases contribution towards retirement benefits like provident fund (usually 12 per cent of the basic pay) and superannuation fund, which means a lower take-home salary,” says Parizad Sirwalla, partner, Tax, KPMG.
Is it good to keep basic salary high?
Basic salary is always taxable and should, therefore, not be more than 40% of the cost to company. However, it should also not be kept too low since it will then result in reduction in the other constituents of the salary.
How can I save tax on 20 lakhs?
Tax Exempted Salary Components
- Meal Coupons.
- Car Maintenance.
- EPF (Contribution by Employer)
- NPS (Contribution by Employer)
- Gift voucher.
- Mobile Phone and the Internet Bill Reimbursement.
- Newspaper/Journal Allowance.
- Children Education/Hostel Allowance.
Which part of salary is non taxable?
The allowance which is paid to the employee by the employer for commuting to work from his/her residence is called conveyance allowance. The allowance is exempt from tax to the limit of INR 1600 per month. Any amount paid greater than INR 1600 will be taxable as per the Income Tax Act.
How can I save tax on 2020 21?
Tips for Saving Tax in FY 2020-21
- Invest in Equity-Linked Saving Scheme (ELSS)
- Invest in the National Pension Scheme.
- Invest in Sukanya Samriddhi Yojna.
- Know When to Opt for the New Tax Regime.
How can I save my tax without home loan?
Tax Saving Schemes
- Public Provident Fund (PPF)
- Sukanya Samriddhi Yojana (SSY)
- National Pension System (NPS)
- Employees’ Provident Fund (EPF)
- Sukanya Samriddhi Yojana Interest Rate.
- National Savings Certificate.
- House Rent Allowance.
- NSC Interest Rate.
How do I maximize my tax return?
Make sure you’re not giving up any more of your hard earned money than you have to!
- Determine Your Tax Bracket. …
- Create a Receipt System. …
- Make a Charitable Payment. …
- Review Your Deductions. …
- Home and Car Expenses. …
- Travel Expenses. …
- Get Paid to Read News and Magazines. …
- Put Your Money in a Super Fund.