Some tips for income tax for salaries employees.
1. House rent allowance (HRA) is a significant constituent of an individual’s salary structure. It is important to know that in case an employee is staying in a rented accommodation, HRA can be claimed as tax exempt, as per the prescribed rules.
2 MOF has done away with exemption towards medical expenditure and transport allowance. These two allowances have been compensated with standard deduction of up to Rs 40000. “The trade-off between the two has benefited the individuals with additional tax exempt income of Rs 5800,
3 The law provides various tax saving avenues, e.g. investment made towards POF,Life Insurance premium, NSC,Sukanya Samriddhi Yojana, repayment of housing loan principal, ELSS, 5-year FD ,tuition fees paid for children's etc. are eligible for deduction under up to Rs 150000.
4 Additional deduction of Rs 50,000 a year can be claimed by employees contributing to the National Pension System (NPS). Contribution to NPS was restricted to only government employees until 2009.
5 Payment made towards medical insurance is also eligible for tax deduction. employees can claim a deduction of up to Rs 25,000 for payment made towards medical insurance taken for self, spouse and dependent children.
6. In addition, deduction of Rs 50,000 can be claimed for medical insurance taken for parents aged 60 years or above
7. specific deduction is available for individuals who have taken an education loan for higher studies. The deduction can be claimed towards interest paid on such loan for a period of eight tax years. However, the principal loan repayment does not qualify for a deduction.
8 Another vital tax saving tool is the interest component forming part of EMIs (equated monthly instalments) paid towards home loans. While computing income under the head house property, homeowners can claim a deduction of maximum Rs 2 lakh annually for a self-occupied property.
9 In case of a let out property, the deduction can be claimed for the entire interest paid.
set-off of house property loss against income under heads is limited to Rs 2 lakh. Balance loss can be carried forward for 8 tax years and set-off against house property income earned
set-off of house property loss against income under heads is limited to Rs 2 lakh. Balance loss can be carried forward for 8 tax years and set-off against house property income earned
10. Considering the above avenues, a salaried taxpayer can claim a benefit of approximately Rs 6,15,000
11. This includes standard deduction of Rs 40000, loss under the head house property of up to Rs 2 lakh deduction under Section 80C of Rs 1.5 lakh, contribution to NPS of Rs 50000, medical insurance premium of Rs 75000 and interest paid for education loan of Rs 1 lakh
12. save tax of Rs 1,91,880 (Assuming the individual is subject to tax at the rate of 30% plus 4% cess).
