5 Ways Salaried Individuals Can Save Tax

For a salaried individual, saving tax is a tricky process. He may not be able to hire a tax consultant so he only needs to manage tax deductions and respective investment. It is important an individual finds a sophisticated option on tax savings investment with which he can save tax as much as possible. In the market, there are several options available to save tax, yet one needs to identify the most suitable one. Here is an exhaustive list of the best tax saving options for a salaried individual.

Under the section 80C of the Income Tax Act 1961, you get the maximum tax exemption up to INR 1.5 lakh. Many investment tools offer this benefit, namely

• National Saving Certificate
• Public Provident Fund
• Equity-linked Saving Scheme
• Post office Tax saving deposits
• Employee’s Provident Fund
• Senior citizen saving scheme
• Home loan principal payment
• National pension scheme
• Life insurance premium
• Sukanya Samriddhi Scheme

Also, you invest additional INR 50000 in National Pension Scheme under 80CCD.

If you have exhausted your limit of section 80C then you need to look out for other options, namely

• Section 80G- Under this section, the donations made to specified funds and charitable institutions get tax exemption.
• Section 80D- Under this section, you will deduction of INR 15000 on medical insurance and INR 20000 for senior citizens. The age limit for senior citizens is 65 years.
• Section 80E- Under this section, if you have taken a loan for high studies then you will get tax benefits. This is valid till 8 years or the entire interest is paid, whichever comes first.
• Section 80TTA: You will get deductions up to INR 10000 on the interest received on saving deposit wit post office or bank.

3. Leave Travel Concession

Using your travel allowance to get tax benefits is another way for a salaried individual for tax savings. This benefit is available twice in a block of four years. Even if you are unable to claim this tax benefit in a four-year block, you can carry forward it and use it in the new block.

We know the principal amount of the loan gets tax deduction under 80C. Apart from that, the interest portion also offers the deductions up to INR 1,50,000 under Section 24. For a salaried individual, tax benefits on home loans will save a lot of money.

Tax savings can be done via reimbursements. There are tax exemptions for medical expenses up to INR 15000 per year, reimbursement on telephone expenses.

It is quite true, that a salaried individual will find it difficult to save tax at the beginning. However, with the help of these options, he/she can make tax savings easy and profitable. It is also important to choose investment options wisely, particularly those that would suit your earnings.

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