Every year, the tax filing season brings with it a slew of hysteria and bustle for salaried workers. You hunt for tax saving possibilities since you need to pay taxes for the current fiscal year.

As an Indian taxpayer, you should be aware of your tax slab and the numerous income tax deductions available to salaried workers. It will assist you in understanding how tax savings for the salaried class function and avoiding potential issues during tax preparation. You can lower the amount of income tax that salaried people must pay if you select the right financial instruments.

To assist you, the Income Tax Regulations under Section 80C, which lists a number of tax-saving investments that can help you obtain tax exemptions and even tax-free income. These assets, which include fixed deposits, income insurance, provident funds, and more, are eligible for tax breaks up to a maximum of Rs. 1.5 lakh.

If you’re looking for ways to save money on your taxes under the Income Tax Act, the top 10 tax saving choices are mentioned below.

Income tax slab for salaried employees

Income tax on salary for individuals below 60 years of age

Annual incomeIncome tax slab rate
Up to Rs. 2.5lakhsExempt
Rs. 2.5 lakhs – Rs. 5 lakhs5%
Rs. 5 lakhs – Rs. 10 lakhs20%
Above Rs. 10 lakhs30%

Income tax on salary as per new regime for individual below 60 years of age

Annual incomeIncome tax slab rate
Up to Rs.2.5 lakhExempt
Rs.2.5 lakh – Rs.5 lakh5%
Rs.5 lakh – Rs.7.5 lakh10%
Rs.7.5 lakh – Rs.10 lakh15%
Rs.10 lakh – Rs.12.5 lakh20%
Rs.12.5 lakh – Rs.15 lakh25%
Above Rs.15 lakh30%

Income Tax on Salary for senior citizens

Annual incomeIncome tax slab rate
Up to Rs.3 lakhExempt
Rs.3 lakh – Rs.5 lakh5%
Rs.5 lakh – Rs.10 lakh20%
Above Rs.10 lakh30%

Income Tax on Super Senior Citizens’ Salary

Annual incomeIncome tax slab rate
Up to Rs.5 lakhExempt
Rs.5 lakh – Rs.10 lakh20%
Above Rs.10 lakh30%

Deductions under Section 80C, 80CCC, and 80CCD

These three sections allow Indian citizens to save money on taxes. People can declare sure deductions in the event that they make investments within side the listed Sections 80C, 80CCC, and 80CCD. PPF Accounts, Pension Plans, Life Insurance Policies, NSC (National Savings Certificates), 5 Year Tax Saving Fixed Deposits, and so on are some of the common instruments that individuals invest in. Citizens can claim a maximum deduction of Rs.1,50,000 under any one of the three parts or all three sections together. Section 80CCD allows anyone who invest in the National Pension Scheme to claim an extra deduction of Rs.50,000.

Home Renter’s Allowance (HRA)

Individuals who live in rental housing are eligible for tax incentives for salaried employees if they follow the regulations. HRA, or House Rent Allowance (HRA), is an element of an employee’s wage structure that is not fully taxable, allowing salaried employees to reduce income taxes. HRA is one of the tax-saving choices for salaried people because a portion of it is exempted under section 10(13A) of the Income Tax Act, 1961, subject to certain conditions. After subtracting HRA from total income, taxable income is computed.

You ought to additionally recognize that HRA acquired from the employers is completely taxable in case you stay to your personal residence and do now no longer pay any rent.. This is a crucial aspect you must consider to understand how salaried person can save tax.

Provident Fund for Employees

Employee Provident Funds are one of the most common ways for salaried people to save money on taxes. The Employees’ Provident Fund and Miscellaneous Act, 1952 established the Employees’ Provident Fund and Miscellaneous Act, which is also known as the EPF. The Central Board of Trustees is currently in charge of it.

You and your employer can both contribute a maximum of 12% of your salary to this fund under this investing scheme. On the amount contributed, you will receive a fixed rate of interest. Both the money you’ve saved and the interest you’ve earned are now tax-free!

Expenses of Medicine

Taxpayers can deduct the cost of medical care from their taxable income. People’s medical expenses become tax-free if they provide their medical bills Medical Allowance is likewise supplied to all personnel through their employers. In a given year, people can claim a maximum of Rs.15,000 in medical expenditures. Section 80D, Section 80DD, and Section 80DDB of the Internal Revenue Code allow taxpayers to deduct money spent for health insurance for themselves or a family member. The amount of the deduction varies by section and is determined on the type of insurance policy obtained by the taxpayer.

Life Insurance Policies

Life insurance is one of the best tax-saving investments since it allows you to save money and secure it for the future. You can choose from a variety of insurance products, ranging from term insurance that provides a death benefit to savings insurance, which is a savings plan that provides guaranteed1 returns to help you achieve your objectives.

Section 80C of the Act allows you to deduct the premiums you pay. In addition, the sum promised received on death and the survivor benefit are eligible for tax benefits under Section 10(10D) if certain conditions are met according to current tax legislation.

Home loan

Most people are encouraged to save money on taxes by taking out a home loan since deductions can be claimed under three different areas, resulting in significant savings. People who take out a house loan can deduct the principle loan amount from their taxes under Section 80C of the Internal Revenue Code. People can deduct the interest they’ve paid on their home loans under Section 24. In some situations, a maximum deduction of Rs.2,00,000 is allowed, but in others, there is no limit to the deduction that can be claimed on the amount paid on home loan interest.

PPF stands for Public Provident Fund.

Without a Public Provident Fund, or PPF, a salaried individual’s income plan is incomplete. A PPF is a government-backed savings scheme that can be opened with as little as Rs. 500. A maximum of Rs. 1.5 lakh can be invested. PPF is classified as EEE, or Exempt-Exempt-Exempt. This means that the amount invested in the fund, as well as the interest received and the maturity amount, are all tax-free. As a result, it’s a great way for you to save money and invest!

Travel Concession (LTC)

As the name implies, a Leave Travel Concession, or LTC, is an exemption that salaried employees receive from their employer to travel on leave. Although the LTC exemption appears to simplify tax savings for salaried employees, there are a number of rules to follow when claiming the exemption. Here are a few examples:

Employees must take a real trip in order to be excluded from paying taxes. The LTC exemption only applies to domestic travel expenses. Salaried individuals can save money on actual travel costs like bus or rail fares, but not on other expenses like local sightseeing. You should also be aware that, under section 10(5) of the Income Tax Act, LTC cannot be classified as a tax-free income every year.

A loan for education

People can save money on taxes by taking out an education loan for themselves, their children, or their spouse, for example. People can claim a deduction for the amount they spent on loan interest under Section 80E of the Income Tax Act. The amount of deductions they can claim has no upper limit. Individual taxpayers can only seek deductions under Section 80E.

Mutual Funds and Stocks

Investing in stocks and mutual funds can help people save money on taxes. Citizens earning less than Rs.12 lakhs yearly are eligible for an additional deduction under Section 80CCG of the Income Tax Act if they invest in shares of certain firms and certain mutual funds. The deductions are accessible solely to first-time investors under the Rajiv Gandhi Equity Savings Scheme.

Pension System (NPS)

The National Pension Scheme, or NPS, is designed for persons with a modest risk appetite who want to save for retirement. Because it is directly under the control of the federal government, it is not only a safe investment but also a great way for salaried workers to save money on taxes. Section 80C of the Internal Revenue Code allows you to claim tax benefits on the contribution. Additionally, you may be eligible for extra deductions of up to Rs. 50,000 under section 80CCD (1b).

Charity

Citizens of India can save money on taxes by claiming deductions on the amount they spent on donations for social or charitable causes, or by contributing to the National Relief Fund. Section 80G of the Income Tax Act allows them to claim such deductions. The Ministry of Finance lists the organizations to which taxpayers can donate, and whether or not deductions are authorized depending on the reason for which the money was donated. Donations that are made in kind are not eligible for tax deductions. Taxpayers can claim a deduction of up to Rs.10,000 for cash donations, but they must donate using cheques for amounts greater than Rs.10,000.

Fixed Deposit with Tax Savings

Fixed deposits, one of the most popular savings choices, are a terrific way to put your money to work for you while also saving money on taxes. They have a 5-year lock-in period and guaranteed1 returns, making them an excellent choice for anyone searching for a secure investment. In addition, under Section 80C, you can claim tax deductions on your tax-saving FD.

Make the most of these tax-saving investments to lower your tax bill.

How to file Income Tax Return in Tambaram, Chennai for salaries employees

For salaried workers, their monthly salary is frequently their primary source of income. Returns or interest earned from various tax saving alternatives for salaried persons, on the other hand, reduce their tax burden, which must be taken into account when filing an income tax return.

The procedure of filing an Income tax return in Tambaram, Chennai  for a salaried individual begins with the completion of a certain type of ITR form. In addition, while filling out the online form, he or she must separately record gross compensation, various allowances, investments, and income from other sources.

The following is a list of documentation that salaried employees must submit while filing income tax return.

  • AS Form 16
  • AS Form 26
  • Interest or TDS certificates
  • As well as a statement of all savings bank accounts

For salaried employees in Chennai, timely filing of income tax returns is a critical financial task. However, there are various misconceptions about how to file returns, as well as a general insufficient knowledge. As a result, we Phoenixtax- Tax consultant in Chennai help you to file income tax returns in Tambaram, Chennai for all salaried employees.