Tax Planning on Salaried Individuals above 10 lakhs:

The basic purpose of making investments in the instruments is to save tax on the amount obtained in the form of salaries.

You can reduce the taxable income amount by investing your obtained income into instruments like TDS and the amount gets refunded as well.

In general, you can seek tax discounting on House Rental Allowance, Leave Travel Allowance, Standard Deductions, Professional tax + Loan + education loan. However, education loans, housing loans, or personal loans are not taken just for the sake of it.

In a salaried class structure, you can reduce the tax component of your salary by carefully applying the grants and exemptions issued by the IT department. Therefore, before the IT department arrives to leive net taxable income. Here is the procedure you must depend upon.

Salary – Exemption = Taxable Salary Income

Taxable Salary Income – Deductions = Net Taxable Income

For it, you can realize that maximizing exemptions, and tax deductions can bring down the tax burden component.

You can go for basic tax planning to advance tax planning by adopting deductions in accordance with Chapter 6A:

Section 80C:

Take for instance 80C deduction in which you can avail of tax exemption up to 1.5 lakh (maximum limit).

You can make investments in several instruments that enable you in exempt from tax, such as Term Plan Insurance. In this case, you can obtain an insurance cover of up to 1 crore for a premium value of up to INR 12,000.

In a similar manner, you can opt for ULIP or Endowment LIC up to INR 12,000.00 premium value.

You can avail the benefit provided through ELSS mutual fund up to 1 lakh rupees and you can go for a monthly premium of INR 800.00 by adopting a Systematic Investment Plan. Your investment must be for a lock-in period of 3 years and you can obtain a CAGR of up to 12 percent.

In case you have school-going children, you can avail children’s education fees from INR 25,000.00 to INR 100,000.00

You must make sure that your combined amount of investment should not exceed 1.5 lakh which is the upper limit.

Section 80TTA/80TTB:

Another area to avail the tax savings is the utilization of Section 80TTA/80TTB.

The 80TTA refers to interest on the savings bank account and 80TTB applies to the deduction that is dependent on the age of the individual.

If the age of the individual is less than 60 then, the deduction will be 10,000.00 and if the age is more than 60 years then the deduction shall be INR 50,000.00.

Section 80CCD(1B):

80CCD(1B) – NPS Account ( National Pension Scheme) for pensioners beginning from 60 years of age.

You can draw a lump sum or annuity pension then the return will be 12 to 15 percent of CAGR. For a pension of INR 50,000.00, you will get a 100 percent tax deduction.

Section 80D:

Another option that is kept open for you is section 80D, which caters to the need for health insurance and expenses. You can avail your own health insurance and your parent’s health insurance.

In case you plan for health insurance, then you can own health insurance up to INR 25,000.00, and companies provide health insurance up to INR12,000.00 to INR 15000.00 and the sum assured will be up to 5 lakhs.

An individual can avail of medical checkup bills up to INR 5000.00 and shall need no submission of proof.

You can have a tax exemption when you are covering your parent’s health insurance.

You can spend a health insurance premium of INR 20,000.00 to INR 25,000.00 if your parents belong to the age group of 50 to 60 years and the insured amount can be up to 10 lakh.

If their age is above 60 years then the health insurance premium shall be between INR 30.000.00 and INR 40,000.00.

In case, your parents have no insurance policy then you can claim medical expenses on spending up to INR 50,000.00.

Section 80GG:

Another type of deduction is known as 80GG (Rent Paid Deduction):

You may be living in a rented house and your company does not provide you HRA then you can claim up to INR 60,000.00 per annum.

Donation Section (80g)

This section 80g applies to trusts, charitable institutes, or societies and you can avail of the tax exemption when you make donations to the 80g institutions.

Some of the charitable institutes provide you 100 percent tax deductions or 50 percent deduction on the amount you donate.

Most prominent institutes that provide you tax exemptions on donations are Akshay Patra, Narayan Seva Sansthan, SavetheChildren, Cry, Goonj, Crowdfunding, GiveIndia, Millaad, Donaekart, etc.

Section (80GGB): Political Party Donations

The political party donations are applicable to parties that are entitled under the Section(80GGB) and you shall be awarded 100 percent deductions to the donation amount made.

There is no ceiling limit when you are getting involved in donating to a political party.