Tips for Saving Tax on Income For 2017
Income tax is a necessary evil for taxpayers. We must pay income tax because it is a vital source of revenue for the government. This is because we citizens enjoy use of public facilities and infrastructure and must contribute to their construction and upkeep.
While the govt. expects you to pay income tax, it also allows you to save on taxes in a legal manner. For instance, you don’t have to pay income tax if your annual earning is less than Rs2.5 lakhs. If income exceeds this amount, you will be taxed in slabs.
Tax planning is a vital part of financial planning. You may be a businessman, professional or salaried individual. You may be using personal accounting software or best small business accounting software. In all cases, you can save taxes to a particular extent via proper planning of tax payments.
Main tax emptions are as per Section 80C of the Income Tax. Following are the various expenses or avenues of investment, through which tax deductions can be saved as per 80C:
- Public Provident Fund (PPF)
- 5-year Post Office or Bank tax savings deposits
- Employees’ Provident Fund (EPF)
- Equity Linked Savings Schemes (ELSS Mutual Funds)
- National Savings Certificates (NSC)
- Tuition fees of children
- Home loan’s Principal Repayment
- Post Office Senior Citizen Saving Scheme (SCSS)
- Premium of Life Insurance
- National Pension System (NPS)
- SukanyaSamridhi Account Deposit Scheme
Section 80 CC
A Maximum Tax deduction of Rs1.5 lakhs is permissible for contribution to Annuity Plan of LIC or any such life Insurance company for the sake of pension.
Section 80 CCD
Employee may contribute to pension schemes notified by the govt. like NPS. Contributions may be up to 10 % of salary and additional benefit of Rs50000 (80 CCD 1.b). This additional benefit is above Rs1.5 lakh limit. As per latest budget, self-employed can contribute up to 20% of gross income to national pension schemes and this can be deducted from taxable income.
Section 80 D
As per this, deduction on health insurance premium is Rs25,000. It is Rs30,000 for senior citizens. A deduction of Rs30,000 for medical expenses is allowable for senior citizens over 80, who are not eligible for health insurance.
Preventive health check-ups costing up to Rs5000 per family can be claimed as tax deductions.
Section 80 DD
One can claim till Rs75,000 for expenditure on medical treatments for dependants (siblings, kids, parents, and spouse) who suffer from 40% disability. Tax deduction to a limit of Rs1.25 lakhs can be availed for severe disability.
Section 80 DDB
A person below 60 years can claim up to Rs40,000 for specific critical ailment treatment. This can be claimed also for dependants. For senior citizens, tax deduction limit is Rs60,000 and in case of very senior citizens (above 80), the limit is Rs80,000. For availing these schemes, one must present prescription or certificate of a registered doctor.
These are some of the modes by which you can save money on tax payments. For help, you can consult professionals for accounting solutions.