If you are an employee and a large part of your salary goes to pay taxes, then know here some ways through which you can get tax exemption.
Income Tax Saving Tips: Employed people should start tax savings as soon as the income tax return (ITR) filing season starts. There are many schemes on which we get the benefit of tax exemption. Let us tell you about some ways through which you can easily save your tax.
House Rent Allowance. HRA is such an allowance, which is given to the employees to pay the rent of their house. Your company also pays HRA along with your salary. Under Section 10(13A) of the Income Tax Act, tax exemption on HRA can be availed subject to certain limitations.
1. Tax exemption on total income in the form of HRA.
2. Up to 50 percent of basic salary for people living in metropolitan cities, up to 40 percent of basic salary for people living in small towns.
3. On paying 10 percent of the total annual income as house rent.
After calculating these three facts, you can use the lowest amount for HRA tax exemption. Apart from this, only that salaried person whose salary includes HRA and who lives in a rented house can save tax on the income earned in the form of HRA.
To get this discount, you have to give tenancy agreement or house rent receipt.
Home Loan
If you have taken a home loan, then you can avail tax exemption on its principal amount under 80C. Apart from this, you can also avail discount on home loan interest. You can avail this exemption under Section 24 (b) of Income Tax. According to income tax rules, tax exemption can be claimed on interest up to Rs 2 lakh. However, this tax exemption will be available only if the property is ‘Self-Occupied’.
Tuition Fees
You can avail tax exemption on the tuition fee portion of the school/college fees you pay for your children’s education. Under Clause 17 of Section 80(C) of Income Tax, a provision has been made for exemption in income tax to parents paying tuition fees or school fees. This discount can be availed on tuition fees of two children. But to get this discount, you will have to present the admission proof and fee receipts from the institution.
Health Insurance Policy
Under Section 80D of the Income Tax Act, if a taxpayer pays health insurance premium, he gets tax exemption. If you have taken a health insurance policy for yourself, spouse, children and parents, then you can claim tax on the premium up to Rs 25,000. In this case the age of the parents should be less than 60 years. If your parents are senior citizens, the tax exemption limit will be Rs 50,000.
EPF
One of the easiest options to save tax for salaried people is Employees Provident Fund (EPF). In this, tax exemption up to Rs 1.5 lakh is available under Section 80C of the Income Tax Act. Interest received in PF account is tax free up to Rs 2.5 lakh annually.
