{"id":21736,"date":"2020-12-12T14:13:22","date_gmt":"2020-12-12T08:43:22","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=21736"},"modified":"2025-02-21T17:57:51","modified_gmt":"2025-02-21T12:27:51","slug":"reduce-your-income-tax-liability-to-save-money-for-your-future","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/reduce-your-income-tax-liability-to-save-money-for-your-future\/","title":{"rendered":"Reduce your Income Tax Liability to save money for your future"},"content":{"rendered":"\n<p class=\"has-drop-cap\">There are legitimate ways to save your tax under Income Tax Act, 1961. Income Tax liability on an income is calculated by adding income from all sources&nbsp; in the total gross then taking all deductions and other tax-exempted allowances (HRA, LTA mutual funds, insurance premiums, NPS, medical insurance etc.) that a person can claim will be subtracted from the total amount. <\/p>\n\n\n\n<p>The net result is taxable income. It is the resulting taxable income figure level which will decide whether you can avail the 100% tax rebate given to that earning up to Rs 5 lakh taxable income.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/reduce-your-income-tax-liability-to-save-money-for-your-future\/#How_to_save_Income_Tax_in_India\" >How to save Income Tax in India?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/reduce-your-income-tax-liability-to-save-money-for-your-future\/#Use_up_to_Rs_15_lakh_Limit_under_Section_80C\" >Use up to Rs 1.5 lakh Limit under Section 80C<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/reduce-your-income-tax-liability-to-save-money-for-your-future\/#Contribute_to_National_Pension_System\" >Contribute to National Pension System<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/reduce-your-income-tax-liability-to-save-money-for-your-future\/#Pay_Health_Insurance_Premiums\" >Pay Health Insurance\nPremiums<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/reduce-your-income-tax-liability-to-save-money-for-your-future\/#Get_the_Deduction_on_a_Rent\" >Get the Deduction on a Rent<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/reduce-your-income-tax-liability-to-save-money-for-your-future\/#Get_the_Deduction_on_an_Interest_on_a_Home_Loan\" >Get the Deduction on an Interest\non a Home Loan<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/corpbiz.io\/learning\/reduce-your-income-tax-liability-to-save-money-for-your-future\/#Keep_some_Money_in_the_Savings_Account\" >Keep some Money in the Savings Account<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/corpbiz.io\/learning\/reduce-your-income-tax-liability-to-save-money-for-your-future\/#Contribute_to_Charity\" >Contribute to Charity<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/corpbiz.io\/learning\/reduce-your-income-tax-liability-to-save-money-for-your-future\/#Few_other_Tax_Saving_Options_in_India\" >Few other Tax Saving Options in India<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/corpbiz.io\/learning\/reduce-your-income-tax-liability-to-save-money-for-your-future\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_to_save_Income_Tax_in_India\"><\/span> How to save Income Tax in India?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" width=\"1000\" height=\"435\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/How-to-save-Income-Tax-in-India.png\" alt=\"save Income Tax in India\" class=\"wp-image-21749\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/How-to-save-Income-Tax-in-India.png 1000w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/How-to-save-Income-Tax-in-India-300x131.png 300w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/How-to-save-Income-Tax-in-India-768x334.png 768w\" sizes=\"(max-width: 1000px) 100vw, 1000px\" \/><\/figure><\/div>\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Use_up_to_Rs_15_lakh_Limit_under_Section_80C\"><\/span>Use up to Rs 1.5 lakh Limit under Section 80C<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The investments\/deductions are all subject\nto a cap of Rs 1.5 lakh can be saved from income tax liability. In other words,\nthey are investments, and any one type of investment will reduce the room for\nanoth. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Tax-Saver FDs<\/h3>\n\n\n\n<p>One can get a tax\ndeduction of up to Rs 1.5 lakh under 5-year tax-saver FDs. It carries a fixed\nrate of interest currently between 7-8%. The interest on FDs is taxable. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">PPF (Public Provident Fund)<\/h3>\n\n\n\n<p>The PPF (Public\nProvident Fund) is a government established savings scheme for a period of 15\nyears available at most banks and post offices in India. Its rate changes every\nquarter however the interest on PPF is tax-free. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">ELSS Funds<\/h3>\n\n\n\n<p>These are a type\nof mutual funds which invest the minimum of 80% of the assets in equity. They\ncan have a lock-in of 3 years. The returns on ELSS funds are also subject to\nLong Term Capital Gains Tax (LTCG) at 10%, and an exemption limit of Rs 1 lakh.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">NSC (National Saving Certificate)<\/h3>\n\n\n\n<p>The (NSC)\nNational Savings Certificate has the tenure of 5 years and the fixed rate of\ninterest. The rate is presently is 8%, where an interest on NSC is\nautomatically counted towards Rs 1.5 lakh 80C limit and also tax-deductible if\nno other investments are using up to that limit.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Life Insurance Premiums<\/h3>\n\n\n\n<p>The premiums for\ndifferent types of insurance policies, including ULIPs, the term insurance and\nendowment policies can be tax-deductible up to Rs 1.5 lakh. However, the\ninsurance cover has to be at least ten times of the annual premium.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">National Pension System (NPS)<\/h3>\n\n\n\n<p>The NPS deduction\nis available under Section 80CCD up to Rs 1.5 lakh for the contributions to\nNPS. It is over and above of Rs 50,000 deduction available under Section 80CCD (1B)<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Home Loan Repayment<\/h3>\n\n\n\n<p>The repayment of a principal amount on the home loan is tax-deductible up to Rs.1.5 lakh p.a., it can be saved from income tax liability <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Payment of tuition fees<\/h3>\n\n\n\n<p>The payment of tuition fees for the children is tax-deductible up to Rs. 1.5 lakh p.a., it can be saved from income tax liability<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">EPF<\/h3>\n\n\n\n<p>Under the <strong>EPF Act<\/strong><sup><a href=\"https:\/\/www.epfindia.gov.in\/site_docs\/PDFs\/Downloads_PDFs\/EPFAct1952.pdf\"><strong>[1]<\/strong><\/a><\/sup>, 12% of the salary of employees in the organized sector is deducted towards the Employees Provident Fund. The deduction counts towards Rs 1.5 lakh limit under Section 80C.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Senior Citizens Savings Scheme<\/h3>\n\n\n\n<p>The contribution\nto SCSS is tax-deductible up to Rs 1.5 lakh. The SCSS has a period of 5 years\nand is available to those above the age of 60. Presently, the rate for SCSS is\nhigher than the existing FD rates (it is also taxable).<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Sukanya Samriddhi Yojana<\/h3>\n\n\n\n<p>The parents of\nthe girl child below the age of 10 years can get the deduction. The scheme has\na period of 21 years or until the girl marries after turning to the age of\n18years. It has an interest above prevailing rates, and the interest in this is\ntax-free.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Contribute_to_National_Pension_System\"><\/span>Contribute to National Pension System<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The deduction under Section 80CCD (1B) is\nup to Rs 50,000, and it is only available for contributions to NPS. The NPS\nallows us to invest in equity and in debt pension funds to build a retirement\ncorpus. One can withdraw it at age of 60years.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Pay_Health_Insurance_Premiums\"><\/span>Pay Health Insurance\nPremiums<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The deduction upto Rs 25,000 is for health\ninsurance premiums under Section 80D. For senior citizens, the limit is\nincreased upto Rs 50,000. Any person contributing to health insurance for\nhimself and senior citizen parents can avail a combined deduction up to Rs\n75,000 p.a. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Get_the_Deduction_on_a_Rent\"><\/span>Get the Deduction on a Rent<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>One can claim tax deduction on the rent, i.e.\n(HRA) House Rent Allowance. In this, there is no upper limit; however, there\nare a certain set of rules that cap a maximum HRA deduction. If you do not have\nHRA but pay rent, then you can claim a deduction under Section 80GG up to Rs\n60,000 p.a.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Get_the_Deduction_on_an_Interest_on_a_Home_Loan\"><\/span>Get the Deduction on an Interest\non a Home Loan<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>If one has a home loan, an interest payable\non it is tax-deductible under Section 24 of Income Tax Act up to Rs 2 lakh p.a.\nIf one gives out a house on rent, then there is no upper limit. However, a\ntotal loss that can be claimed on a broader head of income from house property\nis capped at Rs 2 lakh.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Keep_some_Money_in_the_Savings_Account\"><\/span>Keep some Money in the Savings Account<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>It is probably an easiest deduction under\nIncome Tax Act that individuals can claim. An interest in savings accounts is\nalso tax-free up to Rs 10,000 per year under Section 80TTA. It has a limit of\n50,000 for senior citizens for both FD and savings account interest under\nSection 80TTB.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Contribute_to_Charity\"><\/span>Contribute to Charity<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>One can get a tax deduction on the charitable donations. There is no upper limit but different rules restrict the tax deduction amount available on charitable contributions. For most donations to NGOs, the limit is 50% of a donated amount and up to 10% of adjusted total income. NGOs under this section are required to have the <a href=\"https:\/\/corpbiz.io\/80g-and-12a-registration\" title=\"80G and 12A Registration in India\"><strong>80G certificate<\/strong><\/a> so that one can able to claim the deduction.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Few_other_Tax_Saving_Options_in_India\"><\/span>Few other Tax Saving Options in India<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong><em>Some other pointers should be kept in mind while\nlooking for tax saving methods, such as:-<\/em><\/strong><\/p>\n\n\n\n<ul>\n<li>Under Section 80E, one can\nforego any tax payment on an interest component of education loans. Such\nbenefits are only applicable for first 8 years of loan repayment.<\/li>\n\n\n\n<li>Expenditure incurred by the\nindividuals for medical treatment is exempted from any tax calculations under\nSection 80DDB. The medical bills of up to \u20b940,000 for treatment of specific\ndiseases can be submitted to receive tax waivers. The senior &amp; super senior\nget extended benefit up to \u20b91 Lakh. Nonetheless, treatment charges only cover\nneurological diseases, AIDS, malignant cancer, renal failure, or haematological\ndiseases.<\/li>\n\n\n\n<li>If host is a dependent family\nmember who has the permanent disability, then can claim a tax exemption on all\nexpenses borne for funding the livelihood of that person under Section 80DD.\nAlso, tax exemption can be claimed for disabled members of a HUF.<\/li>\n\n\n\n<li>One can claim up to Rs 75,000\nto finance the expenses of individuals having 40% or higher disability.\nHowever, the exempted amount goes up to \u20b91,25,000 for people who suffer from\n80% or higher disability.<\/li>\n\n\n\n<li>The proper documents required\nto be submitted for medical treatment costs, with the proof of disability in\nSection 2(i) of the Persons of Disabilities Act of 1955. <\/li>\n\n\n\n<li>If are disabled, one can avail\ntax waivers of the same accord under Section 80U respectively.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>All the points will substantially reduce the total taxable income for a stipulated financial year. It helps to know more about the various government-mandated provisions. Make sure to submit your <a href=\"https:\/\/corpbiz.io\/income-tax-return-filing\" title=\"Income Tax Return Filing\"><strong>income tax return<\/strong><\/a> form and <strong><em>Form 16<\/em><\/strong> provided by the employer to get subsequent proceeds.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/dhc-has-allowed-gsp-power-system-to-file-revised-returns-under-dvat\/\">\nDHC has Allowed GSP Power System to file Revised Returns under DVAT\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>There are legitimate ways to save your tax under Income Tax Act, 1961. Income Tax liability on an income is calculated by adding income from all sources&nbsp; in the total gross then taking all deductions and other tax-exempted allowances (HRA, LTA mutual funds, insurance premiums, NPS, medical insurance etc.) that a person can claim will [&hellip;]<\/p>\n","protected":false},"author":10,"featured_media":21757,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[10],"tags":[1313],"acf":{"service_id":"78"},"authorName":"Soumya Bajpai","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/01\/0.jpg","authorDescription":"Soumya has done LLB (Hons) and has a 2+years experience in writing. Her main interest is in reading judgments, new enactments and amendments taking around in law. She always strives to bring the best to work that she does.","postViews":3608,"readingTime":5,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/21736"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=21736"}],"version-history":[{"count":32,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/21736\/revisions"}],"predecessor-version":[{"id":68844,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/21736\/revisions\/68844"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/21757"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=21736"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=21736"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=21736"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}