I’m 27-year-old working for a multinational firm (MNC), drawing a web wage of ₹1.4 lakh per thirty days. My annual earnings is ₹22.3 lakh, of which my taxable earnings is ₹15.5 lakh. My tax-savings come from part 80C devices, the place I make the most of the utmost restrict of ₹1.5 lakh each year (p.a.), and exemption from home lease allowance (HRA) is ₹2.8 lakh p.a. There is skilled tax of ₹2,400 p.a. I’ve additionally bought a flat for which I’ve taken a house mortgage of ₹36 lakh at 9.2% rate of interest. My equated month-to-month instalment (EMI) involves ₹30,000. How can scale back my taxable earnings additional?
—Name withheld on request
Salaried people attempt to maximize their tax financial savings by claiming numerous exemptions and deductions whereas computing taxable earnings. The outdated tax regime permits a person to save lots of earnings tax by numerous exemptions and deductions like medical insurance coverage premium, HRA, and so on. However, if a person opts for the brand new tax regime, then she or he can not declare the above-mentioned deductions. In the present case, we’ve got assumed that you’re planning to go for the outdated tax regime.
You can use Section 80CCD (1B) of Income Tax Act (IT Act), whereby further deduction of ₹50,000 is allowed in a monetary 12 months for investments made in National Pension System (NPS). Such deduction is over and above the deduction of ₹1.5 lakh supplied underneath part 80C.
The Section 80CCD (2) of IT Act permits deduction on employer’s contribution to NPS. The worker is allowed to assert deduction of as much as 10% of wage (assuming you aren’t a authorities worker) in case an employer makes contributions to NPS.
Section 80D permits deduction for medical insurance coverage premium paid for a person (in addition to partner and dependent kids) of as much as ₹25,000. Additional deduction of ₹25,000 is on the market if insurance coverage is taken for folks ( ₹50,000 might be claimed if dad and mom are senior residents).
The Section 80TTA permits you to declare deduction of as much as ₹10,000 in a monetary 12 months, for curiosity earned from financial savings checking account. If the curiosity earnings earned is under ₹10,000, it’s possible you’ll declare a deduction of the entire quantity.
You can declare a tax deduction underneath part 80G of both 50% or 100% of the whole donation to a charitable establishment. Also, it’s possible you’ll analyse the wage parts provided by the employer and go for these wage parts which assist maximize tax advantages.
Aditya Goyal is a Bengaluru-based chartered accountant.
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Updated: 04 Oct 2023, 09:35 PM IST
