If you are a taxpayer, and want to save money spent on taxes, you need to know income tax Section thoroughly. This article guides you on each, and everything related to the tax saving as per the New Central Finance Budget 2014-15
Income Tax Slab for Financial Year 2014-15.
Taxable Income
|
Tax Slab
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Up to Rs. 2,50,000
Up to Rs. 3,00,000 (for residents, 60 years or above)
Up to Rs. 5,00,000 ((for residents, 80 years or above)
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Nil
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Rs. 2,50,001 - Rs. 5,00,000
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10%
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Rs. 5,00,001 - Rs. 10,00,000
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20%
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Rs. 10,00,001 and above
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30%
|
The first step is to know how much tax you would be paying in financial year 2014-15. The above income tax table gives you a brief idea of your overall tax liability....
In addition, an education cess of 3% is charged on the entire tax amount.
There is a small tax relief for those who earn less than Rs.5 lakhs per annum. Finance minister has introduced tax credit of Rs.2,000 to every individual taxpayer who earns less than Rs.5 lakh U/s 87A
Please note that the 'Taxable Income' is arrived at after adding all your sources of income; and subtracting the deductions that you have taken under 'Different Income Tax Section' as given below…
Utilize Income Tax Deductions u/s 80C
The most popular section in your tax planning is Section 80C. It provides up to Rs. 1.5 lakhs in deductions. Investment options under this section include…..
Public Provident Fund (PPF)
National Savings Certificate (NSC),
Long term Fixed Deposit (5-years),
Life Insurance Policies,
Equity Linked Savings Schemes (ELSS)
Unit Linked Insurance Plans (ULIPs),
Kissan Vikas Patra (K.V.P.)
Other Avenue under Section 80(C)
Employee Provident Fund
If you are a salaried employee and have the contribution towards Employee Provident Fund then deduct your contribution to EPF from 1 lakh. This is the amount that you need to additionally invest under Section 80c.
School Fees
Tuition fees, whether at the time of admission or thereafter, paid to any university, college, school or other educational institution situated in India, for the purpose of full-time education of any two children of the employee.
Home Loan Principal Repayment.
The Principal component of the Home Loan EMI qualifies for deduction under Sec 80C
Rajiv Gandhi Equity Saving Scheme u/s 80CCG
The tax deduction for RGESS is u/s 80CCG and it is over and above of Rs. 1.5 lakh limit specified under Section 80C. Further, it is not mandatory for citizens to exhaust the limit of Rs 1.5 lakh specified under Section 80C to make investments under Section 80CCG for RGESS.
You can invest any amount up to Rs. 50,000 for availing tax benefits in RGESS. You are eligible for a tax deduction for 50% of the amount invested.
There are two eligibility conditions to avail tax benefits under Rajiv Gandhi Equity Scheme-
1. Available to those investor whose gross total income is less than Rs.12 lakh.
And investor also need to fulfill the condition no.2
2. He has not opened a demat account and has not made any transactions in the equity segment as on the date of November 23, 2012.
Also, those investor who has opened a demat account before date of 23 November 2012 but has not bought any shares will also be considered as a first-time investor and eligible.
All in One TDS on Salary Preparation Excel Based Software FY 14-15 Click here |
Medical Insurance Premium u/s 80D
Under Section 80D you can save your taxes by taking a health insurance plan.
-Upto Rs. 15,000/- premium paid for health insurance of self + spouse + children.
-Additional Rs. 15,000/- premium paid for health insurance of parents.
Rs 20,000 if parents are senior citizens.
So in total you can save upto maximum of Rs. 35,000 under section 80D.
Download Automated Tax Form 16 Part A&B for FY 2014-15 Click here |
From FY 2012-13, any amount spent on preventive health check-up (for self, spouse, dependent children and parents) can also be claimed for tax exemption up to Rs.5,000/-. However, deduction within the overall limits prescribed in the section.
Interest paid on Housing Loan u/s 24
Home loans are one of the cheapest forms of loans available and also offer tax benefits. Maximum of Rs 2,00,000/- can be deducted from your taxable income as interest repayment for a self occupied house. Please note that this deduction is not available if you the house is still under construction and you do not have occupation of the house.
Interest paid on educational loans u/s 80E
You can claim a deduction on the interest paid on loans taken for higher education for yourself, your spouse and children. There is no limit on the amount of deduction you can claim. The only thing to keep in mind is that the program for which the loan is taken should be a graduate or post-graduate program in engineering, medicine or management or a post-graduate course in the pure or applied sciences.
Donations to Charitable institutions u/s 80G
You can claim a deduction for any donation that you might have made to a charitable fund or institution. However, please note that these donations should be made only to specified institutions. And a proper proof of payment must be provided for the same. Based on the classification of the charity, you can claim either 100% or 50% of the donated amount as deduction. The deduction might also be subject to a certain limit again based on the type of charity that you are donating money
Provisions that you should take advantage of if you are a salaried employee:
1. Get HRA Exemption for Rent paid (Section 10(13A))
Calculate your HRA Exemption U/s 10(13A) Click here
Those who stay in rented house are provided relief through HRA exemption. House Rent Allowance (HRA), which falls under the head Salary, is a component that has a part of it exempt from tax liability. So, if you are getting HRA it should be ensured that a rent receipt is given to the employer to reduce the taxable portion of HRA.
2. Transport Allowance Section 10 (14) Rule 2BB (10)
Transport allowance granted for commuting between your residence and place of work is exempt up to Rs. 800 a month. You can take advantage of this provision to get a tax exemption of Rs 9600 annually by providing your employer with bills or a self declaration.
3. Medical Reimbursement Section 17(2)
You can claim exemption up to Rs 15,000 annually on actual expenditure incurred on your medical treatment or for treatment of any of your dependents. Moreover, there is no restriction of approved hospitals or clinic for the same. This is exempt only on provision of actual bills. However, if the amount is paid out as an allowance not a reimbursement then it would be fully taxable.
4. Leave Travel Allowance Section 10(5)
Use your Leave Travel Allowance for your holidays, which is available twice in a block of four years. In case you have been unable to claim the benefit in a particular 4 year block, you could now carry forward one journey to the succeeding block and claim it in the first calendar year of that block. Thus, you may be eligible for three exemptions in that block.
