Articles

Latest articles on Life Insurance, Non-life Insurance, Mutual Funds, Bonds, Small Saving Schemes and Personal Finance to help you make well-informed money decisions.

Personal Finance - How you can save Rs. 10 lakh in taxes

19 Mar 2015

fjrigjwwe9r3SDArtiMast:ArtiCont

Finance Minister, Arun Jaitley, claimed during his budget speech that a taxpayer could enjoy tax benefit of up to Rs. 4.44 lakh this year. However, after accounting other tax exemptions, tax-free allowances and deductions, one could figure out that an amount of over Rs. 10,00,000 a year could be saved from the tax net. However, conditions do apply.
 
Here are the list of exemptions, allowances and deductions that makes a sum over Rs. 10 lakhs free from tax.


Base Exemption: The budget allows base exemption of Rs. 2,50,000.
80C Exemption: A sum of Rs. 1,50,000 is exempted under Section 80 C, which brings the total to Rs. 4,00,000 ( Point 1 added)


Section 80CCD: An additional Rs. 50,000 is tax exempted if the amount is invested in NPS, which brings the calculation to Rs. 4,50,000.


Employer Contribution to 80CCD: The section also allows tax exemption of up to Rs. 1 lakh for contributions made by the employer to NPS. Thus, total tax-free amount comes to Rs. 5,50,000 from above.


Home Loan Interest or HRA: A home owner could claim up to Rs. 2,00,000 exemption  for home loan interest paid. Also, those living on rent could claim HRA, which could go higher than Rs. 2 lakh based on rent paid and eligibility. This makes Rs. 7,50,000 tax exempt.


Other Allowances: Medical Allowance of Rs. 15,000, Leave travel allowance of Rs. 25,000 and transport allowance of Rs. 19,200 is tax-free, which brings the exempted income to Rs. 8,09,200.


Insurance: Total exemption limit of Rs. 50,000 for insuring self and senior citizen parents adds the tax-free income to Rs. 8,59,200


Adding the perks: If other perks such as travel and fuel reimbursements of up to Rs. 1,00,000, Telephone reimbursement of Rs. 24,000, Newspaper and periodicals of Rs. 14,000 and Meal coupons of Rs. 12,000 are added then it sums up to a total of Rs. 1,50,000. This means that the total untaxed income amounts to Rs. 10,09,200 (6+7).


Many of the limits like medical insurance reimbursement and insurance limits has been raised this year, but yet the calculations as per earlier limits show that Rs. 10,00,000 could easily be saved but with conditions of investments and savings.

Source: India Infoline BACK

Copyright © 2024 www.fundkarts.com. All Rights Reserved