Earning more than Rs 15 lakh? Here’s how you should plan your taxes to get the maximum benefit

The date for tax filing has been extended to August 31st. While most of us have already filed our income tax returns for the financial year 2017-18, for those who have not, this extension comes as a welcome relief. Return filing has its benefits; one of which is that it allows you to paint a complete financial picture of the year that was and make informed decisions for the year that is and make smarter choices for the years to come.

Let’s say, Simran who earned Rs 15 lakh last year is adjusting her tax liability. After claiming a deduction of Rs 1.5 lakh under section 80C, her taxable income stood at Rs 13.5 lakh. Had she planned ahead, she could have claimed additional deductions of up to Rs 4.5 lakh ending up with a taxable salary of Rs 9 lakh, thus saving Rs 1,35,000 in taxes.

Like Simran, If you have exhausted the deductions available under section 80C, here are a few tips to plan your taxes:

Section 80 CCD (1B): National Pension System (NPS)

The Contribution made towards NPS can be claimed as a deduction under section 80CCD(1B). This sub-section provides an additional deduction, i.e. the ceiling of Rs 1,50,000 under section 80CCE will not be applicable to this contribution.

Amount of deduction: up to Rs 50,000

Applicability: Any individual taxpayer who has deposited any amount in his NPS account. The NPS covers New pension scheme and Atal Pension Yojna.

Section 80D: Medical Insurance

Mediclaim insurance premium paid is eligible for deduction under Section 80D. Such medical insurance policy can be for family (self, spouse and dependent children) or parents (dependent or otherwise)

Section 80GG: Interest on Home Loan

Interest paid on home loan is also eligible for deduction under section 80EE. This is an additional incentive provided to first-time buyers. In other words, it is over and above the deduction of Rs 2,00,000 under section 24.

Amount of deduction: up to Rs 50,000

Applicability: Any individual who has taken a loan for the acquisition of a residential house property (provided that he/ she does not own any residential house property on the date of sanction of a loan)

Loans should be sanctioned between April 1 2016, and March 31 2017

Amount of loan is below Rs 35 lakh

Value of house property is below Rs 50 lakh

Section 80GG Rent Paid

Expenditure towards payments of rent for any self-occupied accommodation is eligible for deduction under section 80GG

Amount of deduction :

Amount deductible is the least of the following:
1) Rs 60,0000
2) 25% of total income
3) Rent paid less 10% of total income

Applicability: Self-employed individual

A salaried individual who is not in receipt of House Rent Allowance (HRA)

Such individual’s spouse or minor child should not own any residential accommodation in India or abroad

Section 80TTA – Interest on deposits in savings accounts

Income derived from any deposit in a savings bank with a banking company, a co-operative society or a post office is eligible for deduction.

Amount of deduction: up to Rs 10,000

Applicability: Any individual or HUF.

Source - FE 

Follow by Email