Tips to save Tax in FY 2018-19

 Income Tax Slabs
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Every year, around the middle to end of February, we run through various options to save tax.

In the hurry to save tax, we may end up making unsuitable decisions or paying more than you should. So, it’s always better to plan and execute your tax saving well in advance.

What usually keeps us at bay is the notion that it is a boring or difficult chore. But with a little knowledge about various investments/expenditures/payments which can be claimed as a deduction under various sections, it becomes really simple.

 

Here’s a list of tax saving options:

Section

Particulars

FY 18-19

16

Standard Deduction for salaried class

Rs. 40,000/-

24

Interest component of housing loan

Rs. 2,00,000/-

80C

Principal component of housing loan

Rs. 1,50,000/-

Life Insurance Policies for self, spouse & children (upto 10% of sum assured)

Equity Linked Saving Scheme (ELSS)

National Saving Certificate (NSC)

Public Provident Fund (PPF)/Employee’s Contribution to PF

Tax Saving Fixed Deposits (FD)

80CCD (1)

NPS contribution by employer upto 10% of Salary is deductible from taxable income

No Limit

80CCD (1B)

National Pension Scheme (NPS)

Rs. 50,000/-

80D

Medical Insurance Premium (self; spouse and dependent children)

Rs. 25,000/-

Medical Insurance Premium – senior citizen or senior citizen parents

Rs. 50,000/-

80E

Interest on education loan

No maximum limit

80TTA

Interest Income from savings bank A/c

Rs. 10,000/-

80G

Various donations specified are eligible for a deduction of up to either 100% or 50% with or without restriction
80TTB

Interest Income from savings bank A/c – senior citizen

Rs. 50,000/-

Children Education Expense: the tuition fee paid for the education of two children is eligible for tax deduction under Section 80 C.

Most of us harbor a colossal misunderstanding that we can save taxes by investing in tax saving instruments. We tend to ignore expenses that could give us a tax break. Tax saving options are not only available for investments but also for specified expenditures made by us.

Tax Slabs for FY 2018-19:

 Income Tax Slabs for Individuals Less Than 60 Years Old

Income Slab

Tax Rate

Income up to Rs 2,50,000

No tax

Income from Rs 2,50,001 – Rs 5,00,000

5%

Income from Rs 5,00,001 – 10,00,000

20%

Income more than Rs 10,00,000

30%

Income Tax slabs for Senior citizens who are upto 80 years old have a no tax limit of Rs. 3 lacs and for those aged above 80 years, the limit is Rs. 5 Lacs. Over and above this income, the tax slabs remain the same as individuals.

Under Section 87A, a rebate of Rs. 2,500/- is available if your total Income Less Deductions (under Section 80) is equal to or less than Rs. 3,50,000/-

Taxation for equity & equity oriented instruments:

Capital Gain

Tax Rate

Short Term

15% (held for 12 months or less)

Long Term

10%  (held for more than 12 months) and if total gain above Rs. 1 lac

For equity investments made prior to 31 Jan, 2018, the capital gain will be only on the excess above the market value as on 31 Jan, 2018.

Sound tax planning is very important to transform savings into meaningful investments. It is crucial to optimum returns and meet your goals while benefiting from tax breaks.

Choosing the Best Tax Saving Options is now in your hand.

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