Make money! Start Now! Save income tax, boost your savings; top 5 solutions for you
Income Tax Act has various sections that help an income tax payee to avail tax exemptions by investing in certain schemes.
Income tax return exemptions are what every person who falls in the taxpaying slabs must focus on. Government of India provides not only income tax exemptions up to Rs 5 lakh income, there are some other ways through which one can increase this limit beyond the Income-tax exemption limit by choosing some investment options which gives income tax relief to the income tax payee through various tools like standard deduction, home loan interest rate exemption, LIC policy, health scheme, PPF (public provident fund), National Pension Scheme (NPS), Sukanya Samriddhi Yojana (SSY) etc. Yes, it means you save a lot of money in your bank.
Speaking on the limit to which an income tax payee can save his or her income tax in current tax rules Balwant Jain, a Mumbai-based tax and investment expert said, "Under current income tax rules, one has zero tax liability for up to Rs 5 lakh income, apart from that under section 24(b) the government of India is giving income tax exemption up to Rs 2 lakh on home loan interest payments and an additional Rs 1.5 lakh under Section 80EEA has been introduced in budget 2019. Apart from that, an income tax payee gets income tax exemption up to Rs 1.5 lakh under Section 80 C in which various schemes like ELSS mutual funds, PPF, NPS, LIC policy premium, Sukanya Samriddhi Yojna etc."
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Jain went on to add that if the income tax payee is a salaried one, he or she can claim Standard Deduction up to Rs 50,000. He said that under Section 80D, one can avail income tax exemption on mediclaim premium payment up to Rs 25,000 for his or her family. If he or she is paying the mediclaim premium for his or her parents also, then the income tax payee can avail an additional Rs 25,000 under the same section if the parents are under 60 years of age. In case, parents are senior citizens, then the additional income tax exemption under the same section increases up to Rs 50,000.
Suggesting income tax payers invest in such schemes and avail the income tax exemption benefit of the various sections rather paying income tax Balwant Jain listed out the following top five measures that can help an income tax payee to enhance his tax exemption limit:
1] Section 80C: When it comes to income tax savings, Section 80C is the first and foremost idea that oscillates into the minds of income tax payee. Under this section, an income tax payee can avail income tax exemption up to Rs 1.5 lakh by making investments in schemes like PPF, LIC policy premium, NPS, SSY etc.
2] Section 80D: Sound income requires sound financial future as well. For that, the Government of India has given some income tax exemptions on investment in health or mediclaim premium payments. As per the income tax norms, an employee can avail income tax exemption for up to Rs 25,000 mediclaim premium payments in a financial year. However, if the income tax payer is paying mediclaim premium of his or her parents, who are below 60 years of age, then he or she can claim an additional Rs 25,000 income tax exemption. But, in case, the parents are senior citizens, the limit gets doubles to Rs 50,000. So, under this scheme, one can avail income tax exemption from Rs 25,000 to Rs 75,000.
3] Section 24(b): Under this section, an income tax payee can avail exemption up to Rs 2 lakh for home loan interest rate payments. This is applicable for all those income tax payees who have availed a home loan and are repaying that through the home loan EMI.
4] Section 80EEA: Under this section, an income tax payee can avail an additional Rs 1.5 lakh for home loan interest rate payments. This is applicable for all those income tax payers, who have availed a home loan and are repaying that through the home loan EMI.
5] Section 80CCD(1B): Under this section, an income tax payee can avail exemption up to Rs 50,000 on his or her investments in National Pension Scheme or NPS.
So, by going through Balwant Jain's views that it's better to invest rather giving income tax, these top five income tax sections are helpful for all income tax payee while making their financial planning for the year ahead.