Tax Planning Strategies for Salaried Employees

There are various Tax Planning Strategies for Salaried Employees which includes Section 80C with Rs. 1.5 lakh limit, Section 80CCD1B with Rs. 50,000 limit, Section 80D with Rs. 50,000, HRA (House Rent Allowance), Section 24 with Rs. 2 Lakh limit, etc. These deductions help you to save income tax with old tax regime when you make various investments. New tax regime has very limited options to save income tax.

Let u understand these tax planning strategies for salaried employees in detail.

Table of Contents

Income Tax Saving Tips for Salaried Employees Video
Standard Deduction
Section 80C
Section 80CCD(1B)
HRA (House Rent Allowance)
- HRA Exemption Calculation to Save Income Tax Video
Section 80D
Section 24
Section 80EEB
Download Income Tax Calculator Excel
Conclusion

Income Tax Saving Tips for Salaried Employees Video

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Standard Deduction

Standard Deduction is a flat deduction available for salaried employees with limit of Rs. 50,000 under old tax regime
New tax regime provides Rs. 75,000 as deduction
This standard deduction will be applied automatically while you file ITR
Also, the employer will apply TDS (Tax deduction at source), considering this standard deduction for you, based on selection of old tax regime or new tax regime

Section 80C

Section 80C is the most popular section when it comes to saving income tax in India
It includes various investment schemes such as EPF (Employee Provident Fund), PPF (Public Provident Fund), Life insurance premiums, 5 years fixed deposits, ELSS (Equity linked saving scheme), etc.
You can claim maximum of Rs. 1.5 lakh in a financial year under Section 80C with old tax regime
Remember that new tax regime does not allow deductions under Section 80C, since new tax regime have lower tax slab rates
You can also claim the home loan principal amount that you pay every month as part of EMI under Section 80C

ALSO READ: Old vs New Tax Regime which is Better with comparison

Section 80CCD(1B)

Section 80CCD(1B) includes the NPS (National Pension system) in which you can contribute voluntarily
You can claim up to Rs. 50,000 by investing in NPS online to save income tax with old tax regime
New tax regime also allows this deduction only when your employer contributes in NPS, not with you voluntary contribution
This limit is over and above the limit of Section 80C mentioned above
You can easily invest in NPS online by following few steps

HRA (House Rent Allowance)

House Rent Allowance or HRA component that is provided in your salary payslip can be claimed with old tax regime to save income tax under Section 10
By default, you need to pay income tax on this HRA component
But if you stay in rented accommodation and pay rent, you can calculate HRA exemption Amount to save income tax
Most of the people in India have to work away from their homes, and probably stay on rent, so this is a great option to save income tax without any additional investments
Watch below video to understand how HRA exemption calculation works with examples

HRA Exemption Calculation to Save Income Tax Video

Section 80D

Section 80D includes medical insurance premiums that you pay for family and parents
You can claim Rs. 25,000 as medical insurance premiums paid for self, spouse and children
Additional Rs. 25,000 can be claimed for medical insurance of non senior citizens parents, or Rs. 50,000 if your parents are senior citizens
You need to provide the receipt of the medical insurance premiums paid in a financial year to save income tax with old tax regime

Section 24

Section 24 includes the interest amount that you pay every month as part of home loan EMI
You can claim up to Rs. 2 lakh as interest amount in a financial year under old tax regime
Note that new tax regime also allows this deduction when the property is let out and not self occupied
Hence, your home loan allows you to claim Rs. 1.5 lakh of principal amount under Section 80C and Rs. 2 lakh of interest amount under Section 24
Apart from Rs. 2 lakh under Section 24, you can claim additional Rs. 50,000 of home loan interest under Section 80EE, when you are the first time home buyer

Section 80EEB

Section 80EEB includes the car loan interest amount you pay for electric vehicle
This section was introduced to encourage buying of electric vehicles that can also help you save income tax with old tax regime

Download Income Tax Calculator Excel

You can download the income tax calculator in excel using below button, to understand the tax slab rates, and tax calculation with various slab rates. Also, you’ll know your eligibility for tax rebate 87A and marginal relief with this excel calculator

Conclusion

So these are some of the Tax Planning Strategies for Salaried Employees including investment options.

After adding all numbers, you can claim up to Rs. 7.5 lakh as deductions considering above sections with Rs. 1 lakh of HRA under Old tax regime. This means that you don’t have to pay any income tax on income up to Rs. 12.5 lakh, after considering Tax Rebate 87A.

Based on tax rebate 87A, your income tax will be Rs. 0 on taxable income of Rs. 5 lakh or less with old tax regime and on taxable income of Rs. 7 lakh or less with new tax regime

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Income Tax Calculator App – FinCalC

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What you can do with this mobile App?

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More calculators including PPF, SIP returns, Savings account interest and lot more

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