How can salaried employees save tax?

How can salaried employees save tax?

15 tips to save tax

  1. House Rent Allowance (HRA)
  2. Leave Travel Allowance (LTA)
  3. Employee Contribution to Provident Fund (PF)
  4. Standard Deduction.
  5. Professional Tax.
  6. Exemption of Leave Encashment.
  7. Exemption Under Section 89(1)
  8. Exemption from the Receipt Upon Opting for Voluntary Retirement.

How much tax a salaried person can save?

Section 80C deduction: Claiming the entire Rs 1.5 lakh deduction available under section 80C can reduce your tax outgo by Rs 45,000, for those at the 30% highest tax bracket, excluding the cess.

Which scheme is best for tax saving?

Best Tax-Saving Investments Under Section 80C

Investment Returns Lock-in Period
ELSS Fund 15%-18% 3 years
National Pension Scheme (NPS) 12%-14% Till Retirement
Unit Linked Insurance Plan (ULIP) Returns vary from plan to plan 5 years
Public Provident Fund (PPF) 7%-8% 15 years

How can I save tax in 2021 22?

8 Ways to Save Income Tax Under Section 80C

  1. Life Insurance. Life Insurance does not only provide full life coverage, but it is also the best way to save Taxes.
  2. ULIP’s.
  3. Mutual Funds.
  4. Tax Saving Fixed Deposit.
  5. SCSS or Senior Citizens Savings Scheme.
  6. Provident Fund.
  7. National Saving Certificates.

How do you avoid paying tax on salary?

  1. Use up your Rs 1.5 lakh limit under Section 80C.
  2. 2) Contribute to the National Pension System.
  3. 3) Pay Health Insurance Premiums.
  4. 4) Get a deduction on your rent.
  5. 5) Get a deduction on the interest on your home loan.
  6. 6) Keep some money in your savings account.
  7. 7) Contribute to charity.

How can I avoid paying tax on my salary?

These tips can help you reduce taxes on your income

  1. Invest in Municipal Bonds.
  2. Take Long-Term Capital Gains.
  3. Start a Business.
  4. Max Out Retirement Accounts and Employee Benefits.
  5. Use an HSA.
  6. Claim Tax Credits.
  7. The Bottom Line.

How can I save tax on salary 2020 21?

Different investment options that can be claimed for tax deduction under section 80C are: Employee Provident Fund (EPF) Public Provident Fund (PPF) National Savings Certificates (NSC)

What is the new income tax slab for 2020 21?

Income tax slab rate applicable for New Tax regime – FY 2020-21.

Income Tax Slab New Regime Income Tax Slab Rates FY 2020-21 (Applicable for All Individuals & HUF)
Rs. 5.00 lakhs- Rs 7.5 Lakhs 10%
Rs 7.5 lakhs – Rs 10.00 Lakhs 15%
Rs 10.00 lakhs – Rs. 12.50 Lakhs 20%
Rs. 12.5 lakhs- Rs. 15.00 Lakhs 25%

How much is tax on salary?

Frequently Asked Questions ( FAQ’s )

Income Slab Applicable Tax Rate Tax (in Rs)
Up to Rs 2.50 lakh No tax 0
Above Rs 2.50 lakh and up to Rs 5 lakh 5% 12,500
Above Rs 5 lakh and up to Rs 7.5 lakh 10% 25,000
Total Income Tax Payable 37,500

How is tax calculated on salary?

As his taxable income is Rs. 3,77,500, he falls in the slab of 2.5 lakhs – 5 lakhs of income tax. Thus he has to pay 10% of his net income as income tax….Example.

Basic Salary 25000 * 12 = 3,00,000
DA 4500 * 12 = 54,000
EA 2250 * 12 = 27,000
Gross Salary = 3,81,000
Professional Tax 3500

How to save income tax for salaried employees?

Ways to save income tax for salaried employees – U/S 80DDB (Treatment for specific diseases) Treatment for specific diseases would be eligible for tax deduction up to Rs 40,000 up to 65 years of age and Rs 60,000 for senior citizens. Ways to save income tax for salaried employees – U/S 80GG (Rent paid up to Rs 24,000)

Which is the best tax saving option for salaried professionals?

1. Employees’ Provident Fund (EPF) Employees’ Provident Fund, also known as EPF, is one of the most popular tax saving options for salaried people. It was introduced under the Employees’ Provident Fund and Miscellaneous Act of 1952 and is managed by the Central Board of Trustees.

Which is the tax free savings scheme in India?

PPF (Public Provident Fund): Public Provident Fund is a government established savings scheme with a tenure of 15 years available at most banks and post offices in India. Its rate changes every quarter but is currently 8%. The interest on PPF is tax-free.

Are there any allowances that help you save your taxes?

Following are the allowances that will help you to save your Taxes: These allowances are given as per the grade of the employee. Therefore, you cannot ask for all of them. This is further dependent on the employer who decides the eligibility criteria of employees to avail these allowances.