Most people's investing strategies begin and conclude with tax planning. Although tax benefits are important, they should not be the primary emphasis. Begin by writing down your most important financial goals, as well as the estimated amount of time you'll need to reach them and the amount of money you'll need. To reach financial goals, one might make good use of tax-saving investments. Getting the most out of your tax refund Reimbursements/exemptions – Determine which reimbursements are available from the firm and make the most of them. Expenses that one incurs on a regular basis may help one save money on taxes. Telephone/fuel reimbursements, lunch coupons, and a business automobile are just a few examples. Exemptions alone can decrease a person's tax payment to zero in lower tax brackets. Similarly, paid personnel living in leased flats can seek an exemption from home rent allowance under Section 10(5) of the Act by making the HRA a part of their income. Get knowledge about Financial Basics online only at Complete Circle Capital Pvt. Ltd.

Some of the popularly known Exemptions/Reimbursements

House Rent Allowance

Minimum of –
1. Actual HRA
2. Rent Paid – 10% of Basic
3. 40% of Basic (Non-Metros) or 50% of Basic (Metros)

Transport Allowance

Rs 800 / Month (1600 Per Month from A.Y. 2016-17)

Leave Travel Allowance

Two trips in a block of 4 Yrs Amount not exceeding Air Economy or Rail AC-I Fare shall be for shortest distance and for a single destination

Deductions

A maximum of Rs 1.50 lakh can be invested in provident fund, PPF, infrastructure bonds, fixed deposits (5 years or more), Sukanya Samriddhi Account, NSC, insurance/pension plans, unit-linked insurance, an Equity Investing scheme, and so on under Section 80C. It also includes your children's tuition payments and the main instalment on your home loan. Section 80C Deduction and Tax Planning

A separate restriction of Rs 2 lakh applies to the interest component of your house loan. Benefits from a House and a Loan in Terms of Income Tax

Medical premia of up to Rs 15,000 (Rs. 20000/- as of A.Y. 2016-17) are eligible for the deduction, with parents receiving an extra Rs 15,000 each. In the case of a senior person, an additional deduction of Rs. 20,000/- (Rs. 30000/- as of A.Y. 2016-17) may be claimed. You can claim a separate deduction for your parents' medical premiums. Individuals, HUFs, and Senior Citizens can deduct their Mediclaim premiums under Section 80D.

A person who spends money for the maintenance (including medical treatment) of disabled dependents may be eligible for deductions under section 80DD of the Act. Deduction under Section 80DD for medical expenses incurred by a handicapped dependant.

Individuals who are paying student loan interest should acquire an interest payment certificate under section 80E of the Act. Section 80E - Interest on Education Loans Deduction

Under section 80U of the Act, those who have at least 40% of any handicap are eligible for a deduction of Rs. 50,000/-, and in the event of severe impairment, a deduction of Rs. 100,000/-. Disabled individuals are eligible for a deduction under section 80U. Explore the website and get more insights & Ideas about tax-saving plans.

NPS

It reduces your tax liability by availing the deductions u/s (80CCD) which will be upto Rs.1,50,000/- under section 80 CDD(1) and an additional Rs.50,000/- under section 80CCD (1B) per assessment year (applicable from FY 2015-16/AY 2016-17)

Particulars
Without NPS
With NPS
Gross salary
2,500,000
2,500,000
Basic Salary (40% of Gross salary)
1,000,000
1,000,000
NPS contribution (10% of Gross salary) -80CCD(1)
-
100,000
Additional contribution u/s 80CCD (1B)
-
50,000
Less: Total Deductions u/s 80CCD (1)and 80CCD (1B)
-
150
Less: NPS Deduction u/s 80CCE
-
100,000
Total Taxable Income
2,500,000
2,350,000
Total Tax @ applicable tax
592,250
545,900
Additional Tax Saving due to NPS
-
-
 

Disclaimer

This is merely to serve as a visual aid and a calculator. We do not provide tax-related advice. If you have any questions about taxes, please contact your tax advisor.