Category: Tax Planning

Ways to ease your Tax Burden

As the financial year ends, term TAX sounds TAXING to all individuals who are earning!

Tips to save Income tax for Salaried Person

  1. Explore Section 80C,Section 80CCC, and Section 80CCD, and in combination, you could claim a deduction of 1,50,000 maximum.You can invest in PPF account, five-year tax saving Fixed Deposit, Pension Plans, Life Insurance Policy, Employees Provident Fund or Nationals Savings Certificate [NSC]
  2. Save tax with health insurance claims made under section 80D, Section 80DD and section 80 DDB for self/spouse/children or disabled dependents and treatment for particular disease
  3. Claim tax deductions on Home loan principal under section 80C and interest under section 24.
  4. If you have taken an education loan for yourself/spouse/children, you can claim the deduction under section 80E. However, the deduction is only applicable for interest repayment and not for principal amount.
  5. All taxpayers whose annual income is less than 12 lakh per annum and is investing for the first time in shares/mutual funds could claim an additional deduction under section 80CCG
  6. Individuals who have invested in shares/mutual fund for long term [more than three years] could claim for long-term capital gain.
  7. If you have been donating or working with an NGO the amount donated is tax-free, and you can claim such deductions under section 80G

What are good ways to reduce taxes from salary in India by legal methods?

If an individual plan ahead and invest in the right product, he/she could reduce the tax burden in a legal way. Here are some of the products worth highlighting –

  1. Contribution towards Employee Provident Fund
  2. Life Insurance Premium
  3. Contribution towards Public Provident Funds
  4. Investing in Mutual Funds/UTI
  5. Investing in shares/equity
  6. Post Office deposits for five years
  7. Tax-savingFixed deposits with banks with a lock in period of 5 years.
  8. Paid tuition fees for your children
  9. Contribution to senior citizen savings scheme
  10. Payment made to public deposit scheme of HUDCO
  11. Amount paid to buy a home(stamp duty)
  12. Premium paid to health insurance

Six ways salaried individuals can save taxes

  1. Ask your employer if they can restructure showing food coupons, medical, transport, uniform, telephone, periodicals bills could reduce your tax liability
  2. Utilize section 80C completely with PPF, Equity Linked Savings Scheme, tuition fees paid for your children, NSC, Life insurance premium
  3. Explore section 80D to claim 15,000 for the medical expenses of self, spouse, and children, and with dependent parents, the claim could go up to 20,000.
  4. Exploit section 80 G for donations made to charitable trusts.
  5. Feat HRA claims
  6. Explore options like a Home loan and Leave Travel Allowance [LTA].


Options you can avail to decrease tax burden

For deductions upto Rs 1-lakh

  1. Employee Provident Fund [EPF]
  2. Public Provident Fund [PPF]
  3. Employee Provident Fund [EPF]
  4. Senior Citizen Savings Scheme [ SCSS]
  5. National Savings Certificate [ NSC]
  6. Bank, Post Office tax saving Deposits
  7. National Pension Scheme
  8. Life InsuranceSchemes
  9. Tax Saving Mutual Funds
  10. Home Loan Principal Repayment
  11. Children Tuition fees

For Deductions Beyond 1 lakh

  1. Rajiv Gandhi Equity Savings Scheme
  2. Employers NPS contribution
  3. Health Insurance Premium
  4. Expense made for treatment of disableddependent
  5. Deduction in case of disabled person
  6. Medical expenditure for self/dependant
  7. Interest paid one education/home loan
  8. HRA claims
  9. Donations

How to Pay Less Income Tax

Here are some handy tips to save your from tax-burden –

  1. Leaves Encashment – if you haven’t availed your leaves you get an option to encash them.
  2. Leave Travel Encashment – You and your family are eligible for travels expenses for an annual holiday within India.
  3. Employee Provident Fund and Gratuity – PF withdrawal after five years of service is tax-free. You also receive gratuity after five years of service.
  4. Travel Allowance – travel allowance upto 1600 per month is tax-free
  5. Claim reimbursements for medical expenses upto 15,000 per year for yourself/spouse and dependants.

Five things you should not hide from the Income Tax Department

With digitization and streamlining of theprocess, hiding financial information could attract a tax notice. Here is a list of some of the things you should never hide from tax authorities –

  1. Mutual Funds Bought – All MF firms must provide the information of their customers [name/address, PAN,etc.] to the Income tax authorities if the value is more than two Hence such information could be caught in case you have not included it in in your returns
  2. Huge Cash Deposits – Make sure to mention about the cash deposits that are made in your account as banks do provide these details to the Income Tax
  3. Property Sold and Purchased – Property sold for value more than Rs 30 lakh/50 Lakh needs to be reported by the concerned party to the authorities and hence hiding such transaction could let you in trouble.
  4. Interest earned via Deposits – If you thought to protect the interest earned via Bank Fixed deposits could be an easy task, please be cautious as banks do file the TDS with the pandetails, and hence the authorities would know about the information.
  5. Hiding the salary – If you believe understating your salary could help you save money, you could get into trouble as authorities know your particular package with the allowances and basic package.

Tips to Reduce Self-Employment Taxes

Here are some tips to help you from tax burden –

  1. Use your medical insurance deductions
  2. Keep your accounting clear and digitized
  3. Keep your personal and business deductions separate
  4. Keep your kids expenses separate from business
  5. You can turn your charitable contributions into business expenses

We hope we have answered your queries on how you could ease your tax burden.If you still have any unanswered questions or need help, feel free to contact us here.

We would be glad to help you with your planning and investment related decisions.

Samiksha Seth

Content Strategist

Dilzer Consultants Pvt Ltd


10 March 2017