Income Tax Returns (ITR) filing: Got a pay hike and fell into tax bracket? Save your money, here's how
In India, there are four tax slabs for people up to 60 years of age. These are based on the income criteria.
Income Tax Returns (ITR) filing: According to a recent report by TeamLease, the median salary hike in 2018 has risen to 11.5% from 10.2% in 2017. A salary hike either comes from appraisals or by switching to a job with a better career growth option. However, for one particular reason, a salary hike may worry many of us - and that is, the pay rises by an amount that makes staffer enter the income tax slab.
In India, there are four tax slabs for people up to 60 years of age. These are based on the income criteria. If you earn Rs 2.5 lakh annually, you do not come into the tax bracket. If your annual income is between Rs 2.5 lakh and Rs 5 lakh, you will have to pay 5 per cent tax while if your annual income is between Rs 5 lakh and Rs 10 lakh, you fall into the 20 per cent tax slab. However, if your annual income is above Rs 10 lakh, you will have to pay a whopping 30 per cent in taxes.
The most difficulty is faced by the new income taxpayers who got into the first tax slab with the rise in their salaries. However, there are many ways by which you can save your hard earned money on taxes. The Government of India allows you to claim a deduction of Rs 1,50,000 from your total income under Section 80C.
A point that should be noted here is that even if you do not fall into an income tax returns filing bracket, you should file your returns.
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Here's how you can claim it:
* Life insurance premium for policy: You can claim tax rebate for any life insurance policy either on your name, your spouse name or on your children's name.
* Contribution for participation in unit-linked Insurance Plan of UTI - in case of an individual, in the name of the individual, his spouse or any child of such individual
* Contribution to notified unit-linked insurance plan of LIC Mutual Fund [Dhanaraksha 1989] - in the case of an individual, in the name of the individual, his spouse or any child of such individual
* Tuition fees (excluding development fees, donations, etc.) paid by an individual to any university, college, school or other educational institution situated in India, for full time education of any 2 of his/her children
* Certain payments for purchase/construction of residential house property
* Sum paid under a contract for a deferred annuity - in case of individual, on life of the individual, individual's spouse and any child of the individual (however, contract should not contain an option to receive cash payment in lieu of annuity)
* Sum deducted from salary payable to Government servant for securing deferred annuity or making provision for his wife/children [qualifying amount limited to 20% of salary]
* Contributions by an individual made under Employees' Provident Fund Scheme
* Contribution to Public Provident Fund Account in the name of - in case of individual, such individual or his spouse or any child of such individual
* Contribution by an employee to a recognised provident fund
* Contribution by an employee to an approved superannuation fund
* Subscription to any notified security or notified deposit scheme of the Central Government. For this purpose, Sukanya Samriddhi Account Scheme has been notified vide Notification No. 9/2015, dated 21.01.2015. Any sum deposited during the year in Sukanya Samriddhi Account by an individual would be eligible for deduction.
* Amount can be deposited by an individual or in the name of girl child of an individual or in the name of the girl child for whom such an individual is the legal guardian.
* Subscription to notified savings certificates [National Savings Certificates (VIII Issue)]
* Subscription to notified deposit scheme or notified pension fund set up by National Housing Bank [Home Loan Account Scheme/National Housing Banks (Tax Saving) Term Deposit Scheme, 2008]
* Subscription to notified schemes of (a) public sector companies engaged in providing long-term finance for purchase/construction of houses in India for residential purposes/(b) authority constituted under any law for satisfying need for housing accommodation or for planning, development or improvement of cities, towns and villages, or for both
* Sum paid towards notified annuity plan of LIC (New Jeevan Dhara/New Jeevan Dhara-I/New Jeevan Akshay/New Jeevan Akshay-I/New Jeevan Akshay-II/Jeewan Akshay-III plan of LIC) or other insurer
* Subscription to any units of any notified [u/s 10(23D)] Mutual Fund or the UTI (Equity Linked Saving Scheme, 2005)
* Contribution by an individual to any pension fund set up by any mutual fund which is referred to in section 10(23D) or by the UTI (UTI Retirement Benefit Pension Fund)
* Subscription to equity shares or debentures forming part of any approved eligible issue of capital made by a public company or public financial institutions
* Subscription to any units of any approved mutual fund referred to in section 10(23D), provided amount of subscription to such units is subscribed only in 'eligible issue of capital' referred to above.
* Term deposits for a fixed period of not less than 5 years with a scheduled bank, and which is in accordance with a scheme11 framed and notified.
* Subscription to notified bonds issued by the NABARD.
* Deposit in an account under the Senior Citizen Savings Scheme Rules, 2004 (subject to certain conditions)
* 5-year term deposit in an account under the Post Office Time Deposit Rules, 1981 (subject to certain conditions)
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