Every individual look for opportunities to save income tax and the salaried class are in a frenzy about taxes they must shell out for the said financial year. It is very important to understand your tax slab and what each of your salary breakup components means and the penalty levied against it. This can help you figure out how to save on taxes. If you want to understand your salary components or want to learn how you can save tax on your salary income, this guide is for you.

What is the Income Tax?

Income tax is a portion of your income that you pay to the government. It is the tax collected on an annual basis where the authorities use this money to perform administrative tasks.

There is a host of ways of saving tax under the Income Tax Act, 1961. In this article, we cover all the major tax deductions under the Income Tax Act:

1.Use up your Rs 1.5 lakh limit under Section 80C The below-mentioned investments/deductions are all subject that falls under the Rs 1.5 lakh criteria includes:

• Tax-Saver FDs
• PPF (Public Provident Fund)
• ELSS Funds
• NSC (National Saving Certificate)
• Life Insurance Premiums
• National Pension System (NPS)
• Home Loan Repayment
• Payment of tuition fees
• Employee Provident Fund
• Senior Citizens Savings Scheme
• Sukanya Samriddhi Yojana

2.Contribute to the National Pension System: The NPS allows you to invest under Section 80CCD(1B) up to Rs 50,000 is only available for contributions to the NPS.

3.Pay Health Insurance Premiums: A deduction up to Rs 25,000 is available for health insurance premiums under Section 80D.

4.Get a deduction on your rent: You can claim a tax deduction on your House Rent Allowance (HRA) if you get HRA.

5.Get a deduction on the interest on your home loan: If you have a home loan, the interest payable on it is tax-deductible under Section 24 of the Income Tax Act up to Rs 2 lakh per annum.

6.Keep some money in your savings account: This is probably the easiest deduction under the Income Tax Act that individuals can claim.

7.Contribute to charity: You can get a tax deduction on your charitable donations. For most of the donations to NGOs, the limit is 50% of the donated amount and up to 10% of your adjusted total income.

How can we help you?

Apart from regarding all the above tax saving options, consult a professional tax planner from Online Legal India™ to avoid any last-minute trouble while filling your Income Tax Returns. It is crucial to start your tax planning well before 31st March and to file your returns before the 31st of July each year.