Thread by @ICICI_Direct

1/14

It's that time of the year when your company HR asks for your investment proofs.

Does this tax planning stress you?🥵
It won't any more😌

10 powerful tax saving tips for salaried employees. A thread🧵👇

#taxplanning #icicidirect

2/14
First get basics in place before you think of exotic solutions.

A. 80C investment upto ₹1.5L can save up to 46,800/-
🔶 PPF
🔶 Employee's Contribution to PF
🔶 Equity Linked Savings Scheme (Tax Saver MF)
🔶 Endowment/Term /ULIP Insurance Policies
🔶 Home Loan Principal etc

3/14

80C/ What to choose for investment?

Here are basic differences b/w ULIP policies, PPF, ELSS to know👇

Factors you should consider are return expectation, variability of return, lock-in period and tax implication.

🟢 Good; 🔴 Not so good

4/14

B. Dual Home Loan Deduction

If you purchase a house & avail home loan with another earning member of your family,

You can claim the following deductions in both members' ITR:

A. Section 24: ₹2L for interest
B. Section 80C: ₹1.5L loan repayment

to the extent incurred.

5/14

C. Car Expenses

You can reduce your taxable income on the following car expenses:
- Lease
- Insurance
- Maintenance
- Driver's salary

Employer will ask for the proofs of these expenses. Subject to limits mentioned in Income Tax Act and Rules.

6/14

D. National Pension Scheme - Deduction under 80 CCD

🔶 It's a retirement planning tool
🔶 Mix of Debt & Equity (flexible to an extent)
🔶 Stringent withdrawal conditions
🔶 Min. 40% of corpus at age 60 will be used towards pension

How much can I contribute? Keep reading👇

7/14
/NPS

Maximum allowable deduction under NPS each year:

A. Own contribution: ₹50,000

B. Employer Contribution:
- Private Employees: 10% of basic salary & DA
- Government Employees: 14% of basic salary & DA

These limits are in addition to 1.5L limit under Section 80C.

8/14

E. Health Insurance Deduction (80D)

A. Up to ₹25,000 for self, spouse, kids
B. Up to ₹50,000 for senior citizen parents

If parents are not Sr. citizens, up to ₹25,000 for them

Medical inflation is rising at 14% in India. Very important to get a health insurance ⚕️

9/14

F. House Rent Allowance (HRA)

If you live on rent, you're allowed to claim a deduction of lowest of the following:

A. Actual HRA Component

B. Actual Rent Paid (-) 10% of Basic Salary

C. 50% of Basic Salary if living in DL/Mum/Kol/Chennai. Otherwise 40% of Basic Salary

10/14

G. Enjoyed Huge Capital Gains😏 and buying a House?

As per Sec 54F, you can avail deduction of capital gains if you purchase a house:

A. 1 yr before or 2 yrs later
B. Construct within 3 yrs

of transfer of assets

No capital gains if,
Cost of House > Net Consideration

11/14

H. Leave Travel Allowance

Love travelling?
Govt allows you to claim deduction of Travel cost twice in a block of 4 years

Conditions:
- Domestic Travel
- Nothing for stay, food etc.
- Travel Fare Allowed: Economy Air/ Rail AC First Class Fare

Subject to other conditions

12/14

I. Hindu Undivided Family (HUF) Planning: Married folks take note.

Under Tax laws, a legal entity HUF can be created by:
- Hindu
- Jain
- Sikh
- Buddhist families

Income from certain family biz. or assets can be transferred here to enjoy 5L slab rebate - Consult your CA.

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Miscellaneous savings:

J. Mobile Bill and Books / Periodicals Reimbursement

On account of the above expenses, an employee may claim deduction of the lower of:

- Bill amount
- Amount provided in the salary package

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Summary:
1. 80 C investment up to 1.5L
2. Dual home loan deduction
3. Car expenses
4. NPS: up to 50K
5. Health Insurance (80D)
6. House Rent Allowance
7. Capital Gains and buying house
8. Leave Travel Allowance
9. HUF
10. Miscellaneous.

/end
#taxplanning #icicidirect

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Please note that we have covered the Income Tax provisions in brevity due to word limit. Kindly refer a CA / Investment Adviser before taking any tax / investment decision.

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