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<div class="common-bread-crumb" style="margin:auto; margin-top:70px;"><a href="index.php">Home</a> > <a href="Contents_Articles.php">Articles Menu</a> > <a href="Loan-Articles.php">Other Articles</a> > How to save on taxes?</div>
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<h1 class="d4l-h1">How to save on taxes?</h1>
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<p> It's that time of the year when everyone starts thinking about taxes. Every year, taxpayers try to save and invest so that they minimize taxes and maximize disposable income. This is where TAX PLANNING comes in. Tax planning, as part of your overall financial planning exercise, helps you figure out how to make full use of the breaks on offer under current income tax rules.<br>The ideal time to plan your taxes is in April, at the beginning of the financial year. But for those who couldn't manage the tax planning then or now don't have ready funds to nullify your income tax payable; there are still enough investment options that would substantially lighten the burden while deploying funds profitably.<br>Check From the below given slabs how much tax you are liable to pay<br>
<table width="98%" border="0" cellpadding="0" cellspacing="1" class="table_bgcolor_Border">
<tr class="table_bgcolor">
<td height="30" colspan="3" align="center"><b>Tax Slab For Salaried Men</b></td>
</tr>
<tr bgcolor="#FFFFFF">
<td width="145" height="30"><b>Upto 1.1 lakh</b></td>
<td width="112">NIL</td>
<td width="239"> </td>
</tr>
<tr bgcolor="#FFFFFF">
<td height="30"><b>1.1-1.5Lakh</b></td>
<td>10% of income above Rs. 1.1 Lakh</td>
<td>No tax is levied on income upto Rs. 1.1 lakh. 10% is levied on Rs.40000
(1.5 lakh-1.1 Lakh)</td>
</tr>
<tr bgcolor="#FFFFFF">
<td height="30"><b>1.5-2.5Lakh</b></td>
<td>Rs4000 (of the earlier slab) + 20% of the income above Rs.1.5lakh</td>
<td>He has already paid tax on the income upto Rs.1.5lakh. 20% is levied
only on 1,00,000 (2.5lakh-1.5lakh)</td>
</tr>
<tr bgcolor="#FFFFFF">
<td height="30"><b>Above 2.5 Lakh</b></td>
<td>Rs.20, 000+ Rs.4000 (of the earlier slabs) + 30% of the income above
2.5Lakh</td>
<td>He has already paid tax upto income 2.5lakh. so 30% is levied on the
income above 2.5Lakh</td>
</tr>
</table>
<br />
<table width="98%" border="0" cellspacing="1" cellpadding="0" class="table_bgcolor_Border">
<tr class="table_bgcolor">
<td height="30" colspan="2" align="center"><strong>Tax Slab For Salaried Women</strong></td>
</tr>
<tr bgcolor="#FFFFFF">
<td height="30" align="center">Up to Rs.1.45Lakh</td>
<td align="center">Nil</td>
</tr>
<tr bgcolor="#FFFFFF">
<td height="30" align="center">1.45 Lakh -1.5 Lakh</td>
<td align="center">10%</td>
</tr>
<tr bgcolor="#FFFFFF">
<td height="30" align="center">1.5 Lakh to 2.5 Lakh</td>
<td align="center">20%+500</td>
</tr>
<tr bgcolor="#FFFFFF">
<td height="30" align="center">Above 2.5 Lakh</td>
<td align="center">30% + 20000+500</td>
</tr>
</table>
<br />
<b>Now that you have calculated the tax payable on your income the next question
you might be having in your mind would be- "How Can I arrange for funds
in this month end time and reduce my tax burden by taking up tax saving
plans? </b>"<br>
<br/>
<strong>You can take up below mentioned options and take up new tax saving
plans for tax exemptions as per income tax act. </strong><br>
• Cutting the expenditures and then making the investments is the best option
anybody can go for. Under Sec 80C of Income Tax Act, you can claim tax exemption
on your savings up to a limit of Rs 1 Lakh. Its might not be possible for
many of us to cut down our expenses and arrange for Rs 1 Lakh. The Better
option would be to cut your expenses as much as you can and for the rest
amount see the next alternative.<br>
• Another alternative that take up a Personal Loan to avail those funds
which you can invest in schemes like Life Insurance, ELSS, NSC, PPF etc
and claim tax exemptions. <a href="http://www.deal4loans.com/apply-personal-loan-continue.php">Apply for Personal Loan</a> here.
<p>Investing by taking a <a href="http://www.deal4loans.com/personal-loans.php">personal loan</a> is an idea that should be taken keeping
in mind the following things:</p>
<p>• Rate of return on your investment should be higher than the rate of interest
that you are paying for your <a href="http://www.deal4loans.com/">loan</a>. <br>
• Mode of calculation of the interest: Interest on Personal loan is calculated
usually by monthly reducing balance method, which makes the interest payable
to reduce with the reduction of the Principal. Furthermore, the Rate of
interest for the investments is calculated on the basis of Flat rate method.
This makes the interest payable on the loan lesser than interest earned
on the investments.<br>
• Duration: Usually Personal Loan is taken for duration of 2 to 4 years
and the investment plan on which you claim foe deductions are usually taken
for more than 5 Years. So at the end of the period loan would be in any
case be paid have by monthly reducing balance method and the investments
would be near to the period of maturity.<br>
But at the end do keep in mind that taking up a Personal loan is a short-term
solution (Interested in taking up a loan, <a href="http://www.deal4loans.com/compareloan.php" target="_blank">Click here</a>); Tax Planning should
be initiated in the beginning of the financial year itself. And do pay off
your debts as soon as possible to avoid the Debt trap and get the maximum
out of your investment.</p>
<p> How to start with your tax planning? This can be explained in three simple
steps:<br>
<b>1.Compute your liabilities</b>
<p>The easiest and quickest way to go about tax planning is to first get a
fix on your liabilities that earn a tax benefit. So here comes your <a href="http://www.deal4loans.com/Contents_Home_Loan_Mustread.php" target="_blank">home
loan</a> into the picture. The rebates associated with a home loan from a tax
saving perspective are on the interest paid as well as on the principal
repaid. The deduction of interest payable on the loan taken to buy the house
property is up to a maximum of Rs. 1,50,000 every year under section 24(b)
and the principal portion of the loan repaid to the bank will be eligible
for deduction under section 80C (along with other contributions and investments)
up to a maximum limit of Rs. 1,00,000. <br>
So if you have an outstanding home loan, you need to isolate the principal
amount from the interest (in the EMI - equated monthly installment) to calculate
the tax savings under Section 80C. <br>
If you need a <a href="http://www.deal4loans.com/home-loans.php">home Loan</a>, <a href="http://www.deal4loans.com/apply-home-loans.php">Click here</a> </p>
<p> <b>2.Compute your fixed investments/contributions</b><br/>
This includes two things:<br/>
<strong>The deductions made from your salary by your employer as apart
of tax-exempted savings like </strong><br/>
• Annual contribution to EPF (employees' provident fund), <br>
• PPF (public provident fund): Only contributions of upto Rs 70,000 per
annum are eligible for a tax benefit. Apart from Section 80C tax benefits
at the time of investing, interest income from investments in PPF is exempt
from tax under Section 10(11) of the Income Tax Act. <br>
• Gratuity: They are exempt subject to conditions and limits laid down in
the Income Tax Act.<br>
Different plans taken by you for tax saving or investment purpose like:<br>
• Life Insurance premium: An individual can claim deduction on premium paid
for a maximum of Rs 100,000 in each financial year. For your life insurance
requirement <a href="http://www.bimadeals.com/compareinsurance.php" target="_blank">apply here</a><br>
• Health Insurance Premium: The premium paid for medical insurance qualifies
for rebate under Section 80D as follows:<br>
- Insurance premium paid or Rs 10,000 whichever is lower. <br>
- The aforesaid limit is Rs 15,000, where the individual or his spouse or
dependent parents or any member of the family (for whom such premium is
being paid) is a senior citizen (i.e. one who is resident in India and who
is at least 65 years of age at any time during the previous year). <br>
- The Insurance Regulatory and Development Authority (Irda) has clarified
that only the premium collected for providing health cover in the case of
unit-linked health insurance policies will be eligible for tax benefits.<br>
- For your Health insurance requirement <a href="http://www.bimadeals.com/health-insurance-india/Req_Health_Insurance_New.php" target="_blank">apply here</a><br>
• National Savings Certificate (NSC): Interest income from NSC investments
is chargeable to tax. However, the interest accruing annually is also deemed
to be reinvested, hence it qualifies for deduction under Section 80C. <br>
• Tax saving fixed deposits: These are conventional fixed deposits offered
by banks; however investments therein (upto Rs 100,000 per annum) are eligible
for tax benefits under Section 80C.</p>
<p> <b>3. Invest the balance in suitable avenues</b><br/>
° Equity Linked Saving Schemes (ELSS): This is one of several schemes by
the mutual funds and is popular among high net worth tax payers because
of their unique features<br>
° Fixed Deposit (FD) for minimum 5 years<br>
° Pension Funds<br>
° Being charitable helps you too. Money donated to tax-approved charitable
institutions is deductible to the extent of 50%, subject to conditions.
Deduction of 100% is available in the case of payment to certain specified
funds like Prime Minister's National Relief Fund.<br>
° Tuition Fees including admission fees or college fees paid for Full-time
education of any two children of the assessee (Any Development fees or donation
or payment of similar nature shall not be eligible for deduction).<br>
° Infrastructure Bonds issued by Institutions/ Banks</p>
<p>In our view, investors need to give tax planning a lot more thought and
evaluate how they can use the Rs 100,000 tax-saving bounty a lot more fruitfully
and judiciously. It would be difficult for anyone to single out one single
instrument that is best for everyone. For instance, someone who is risk-averse
can opt for life insurance or five-year deposit with a bank. For someone
keen on saving tax, even on income arising out of the instrument would prefer
PF or PPF. Then, for the young and high net worth, with a good risk appetite
can go for ELSS.<br>
<br>
<b> Below given are the various Sections under which you claim for Tax Exemptions.</b><br>
<b>• Section 80G-</b> Deduction in respect of donations to certain funds, charitable
etc<br>
<b>• Section 80C-</b> Deduction in respect of life insurance premia, deferred annuity,
contributions to provident fund, subscription to certain equity shares or
debentures, etc.<br>
<b>• Section 80CCA-</b> Deduction in respect of deposits under National Savings
Scheme or payment to a deferred annuity plan<br>
<b>• 80CCB:</b> Deduction in respect of investment made under Equity Linked Savings
Scheme<br>
<b>• 80CCC:</B> Deduction in respect of contribution to certain pension funds<br>
• 80CCD: Deduction in respect of contribution to pension scheme of Central
Government<br>
<b>• 80CCE:</b> The aggregate amount of deductions under section 80C, section 80CCC
and section 80CCD shall not, in any case, exceed one lakh rupees.<br>
<b>• 80D:</b> Deduction in respect of medical insurance premia<br>
<b>• 80E:</b> Deduction in respect of interest on loan taken for higher education<br>
<b>• 80G:</b> Deduction in respect of donations to certain funds, charitable institutions,
etc.<br>
<b>• 80GG:</b> Deductions in respect of rents paid</p>
<p>Finally, having made your investments and claimed the tax breaks, don't
forget to keep the records and documents of your investments and tax deduction
certificates, since you will have to attach them with your returns. As can
be seen, the assured return segment has a wide range of investment avenues
to offer subject to a maximum limit of Rs.1Lakh. The onus for making the
right choice and getting invested in an apt instrument lies with you.</p>
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