Section 80C

As per income tax act, under Section 80C up to a maximum of Rs. 1,00,000 is deductible from your annual income. This means that your annual income gets reduced by Rs. 1,00,000 and you end up paying no tax on it at all. This benefit is available to everyone, irrespective of their income levels. You can invest in any of the investment options but the tax benefit is limited to Rs 1,00,000. List of eligible investments are as follows

Employee Provident Fund (EPF) Voluntary Provident Fund (VPF) Public Provident Fund (PPF) Principal repayment of housing loan installments Equity linked saving scheme (ELSS) National savings certificates (NSC) Post office term deposits Life insurance premiums paid Tax Saving Fixed Deposit Senior Citizens Savings Scheme

But the limit for section 80C deductions is Rs. 1 Lakh so the maximum income tax that you can save is Rs. 30,000 if you fall in the highest tax bracket of 30%. In addition to the limit of Rs 1 Lakh for the fiscal year 2010 11, an investment of Rs 20,000 in infrastructure bonds will qualify for income tax deductions. If you have invested Rs 1 Lakh in the list of eligible investments and Rs 20,000 in infrastructure bonds, you can save tax on Rs 1, 20,000.

Reduce Income Tax Buy a house/flat with a home loan

Buying a house/flat by taking a home loan can help you reduce tax. You can save upto Rs 1.5 Lakh on the interest component of home loan and Rs 1 lakh on the principal component of home loan. The principal portion falls under Section 80C of income tax act.

Reduce Income Tax Medical Insurance premium

If you have do not have a medical insurance, opt for it immediately. A medical insurance is a must for all in terms of insuring you and your family for any medical emergencies and also in saving tax. Any Premium which is paid for medical insurance that has been taken on the health of the assessee, his spouse, dependent children, is allowed as a deduction, subject to a ceiling of Rs 15,000 per annum. A further deduction of Rs. 15,000 is also allowed for buying an insurance policy in respect of dependent parents.

Reduce Income Tax House Rent

Ensure to deposit the house rent receipts with your employer. You can save tax on house rent, if you are staying in a rented property. If you have a home loan and you staying in a rented property, you can benefit from both fonts saving tax on house rent as well as saving tax on home loan interest and principal payment.

Reduce Income Tax Tuition Fees for your kids

According to the Income Tax Act, deduction under this section is available for tuition fees/ school fees paid on two childrens education. Deduction is available for any two children only.

Reduce Income Tax Loss in stock market

Have you incurred any loss on your stock investments? If yes, book your loss by selling the stock and show the loss in your income tax filing. This will help you in reducing income tax.

Reduce Income Tax Save tax on your vacation (LTA)

You are eligible for a deduction under Leave Travel Allowance (LTA), if you have applied for leave from your company and have actually traveled. The total travel expenses incurred are covered. Under LTA, you and your family are covered. Family includes your, parents, dependent siblings, spouse and children. You can avail LTA once in two years. Check the LTA component of your salary and if you have plans to travel, make sure you submit your travel cost receipts.

Reduce Income Tax Food Coupons

You can save a maximum tax on Rs 3000 per month by opting for food coupons. Food Coupons are very common these days and majority of the retail food stores/ restaurants accept Food Coupons. You can even reduce the food coupons limit based on your tax bracket and your monthly expenditure on food.

Reduce Income Tax Conclusion

One rupee saved is a rupee earned. Saving tax on your income is highly recommended to all salaried employees. It is your money, so try to save as much income tax as you can by investing and declaring the accepted expenses (example LTA).

Section 10(13A) : House Rent Allowance

Every salaried employee is eligible for Rent tax deduction under the Income Tax Act. What is House Rent Allowance? House rent allowance (HRA) is an allowance provided by the employer to the employee to meet the expenses incurred of renting a house. Every employer as a part of the salary component, have house rent allowance. Every employee can avail rent tax deduction for the rent paid on their accommodation House Rent Allowance Calculation Deductions on House Rent Allowance (HRA) are eligible under Section 10(13A) of the Income Tax Act. House Rent Allowance Calculation can be calculated by any individual himself if the individual fulfills the following three conditions An HRA allowance is received as part of the salary package. If one is staying in a rented accommodation and paying rent for it. The rent exceeds 10% of the salary. Lets calculate house rent allowance

Select the minimum of the following three options 1. Actual house rent allowance received from your employer 2. Actual house rent paid by you minus 10% of your basic salary 3. 50% of your basic salary if you live in a metro or 40% of your basic salary if you live in a non-metro Taxable HRA = House Rent Allowance Minimum of the following 3 options. Taxable HRA is the amount on which you have to pay tax.

Claim income tax deduction for rent paid to your parents

For most of us House Rent Allowance is an important component of our salary and the government, realizing the importance of accommodation as a basic need, has been granting various tax exemptions for the amount spent on it. What is HRA? The House Rent Allowance (HRA) is the amount paid by the employer to the employee to compensate for the house rent paid by the employee for his accommodation. You are eligible for HRA even if you have given your own house on rent and staying in a rented house yourself in the same city or if you have a house in one city and you are working in another city. The Income Tax department grants you some exemption on the HRA received by you or rent paid by you for your accommodation. Your Parents Can be Your Landlords You are entitled for a deduction of rent paid from your income tax even if you are paying rent to your parents treating them as your landlord. For this purpose, the house should be in the name of your parents and your parents should issue a receipt for the rent received by them. But the rental

income received by your parents are taxable and they have to declare this income in their annual tax return. How To Claim Deductions On HRA Exemptions on HRA comes under Section 10(13-A) of IT Act and there are certain conditions under which the deduction is granted. First of all, you should have received House Rent Allowance as a component of your salary. Secondly, you should be staying in a rented accommodation. The third condition is that the rent paid should exceed 10 per cent of your salary. Other Conditions In order to get the benefit of deduction of HRA, one has to submit the receipts of rent paid to the Income Tax department. The maximum deduction allowed is 40 per cent of your salary for all cities in India except for metros like Mumbai, Delhi, Kolkata and Chennai where the deduction allowed is 50 per cent. As you know, the income tax benefits on home loan is different from the deductions allowed on HRA as both are totally different. But in both the cases, you have to fulfill certain conditions as laid down in the IT Act. For claiming deductions under HRA, you should be staying in rented accommodation. If you are staying in your own house without paying any rent or in a rent-free accommodation provided by your company, you are not eligible for any deduction. One more condition is that if the HRA drawn by you is up to Rs.3000 per month, you are not required to produce any rent receipt. As mentioned earlier, if you are paying rent to your parents for which you are getting rent receipts, you are eligible for a deduction from Income Tax. However, the same is not possible if you are paying rent to your spouse even if your spouse is issuing rent receipts. The reason behind this rule is that there cannot be a commercial relationship between spouses as they are believed to be staying together.

Section 24: Interest paid on housing loan

You can save a good amount of money in tax, if you have taken a home loan. A home loan monthly installment like any other loan installment has two components Principal and Interest.

Tax Savings on home loans Interest repayment According to Sec 24 of the Income Tax Act, 1961 a deduction up to Rs. 150,000 can be claimed. This deduction is claimed towards the total interest you pay on the home loan towards purchase or construction of house. Tax Savings on home loan Principal repayment of home loan installments The principal repayment up to Rs. 100,000 on your home loan will be allowed as a deduction under section 80C of income tax act. On home loan, you can save upto Rs 2,50,000 per annum ( Rs 1,50,000 Interest repayment and Rs 1,00,000 Principal repayment). That means you can do a tax savings on home loan for more than Rs 20,000 per month.

Tax Savings ||| Section 80D: Health Insurance Premium

Any Premium which is paid for medical insurance that has been taken on the health of the assessee, his spouse, dependent children, is allowed as a deduction, subject to a ceiling of Rs 15,000 per annum. A further deduction of Rs. 15,000 is also allowed for buying an insurance policy in respect of dependent parents. For Senior Citizens, a deduction of Rs 20,000 is allowed under section 80D. Who are eligible under Section 80D (a) In case of an individual Insurance on the health (health insurance) of the assessee, or wife or husband, or [dependent] parents or dependent children. (b) In case of an H.U.F.- Insurance on the health of any member of the family.