Usually employed people should start saving tax as soon as the Income Tax Return (ITR) filing season begins. There are many schemes to avail the benefit of tax exemption. Let's take a look at some easy ways to save on your taxes. HRA is given to employees to pay their house rent. Your company pays HRA along with your salary. Under Section 10(13A) of the Income Tax Act, HRA is tax deductible subject to certain limitations. Tax exemption on gross income in the form of HRA. Up to 50 percent of basic salary for metropolitan residents and 40 percent of basic salary for small town residents, paying 10 percent of gross annual income as house rent. After calculating these three facts, the lesser amount can be used for HRA tax deduction. Apart from this, only a person having salary including HRA and living in a rented house can save tax on the income earned in the form of HRA. To get this discount, you need to provide the rental agreement or house rent receipt.
Moreover if you have taken a home loan, you can claim tax deduction under Section 80C for the principal amount. Apart from this, you can also avail discount on home loan interest. This deduction can be availed under section 24(b) of Income Tax. As per income tax rules, interest up to Rs 2 lakh can be tax exempted. However, this tax exemption is available only if the property is 'self-occupied'. Perhaps the tuition fee portion of the school/college fees you pay for your children's education is tax deductible. Under Section 17 of Section 80(C) of Income-tax, provision is made for exemption from income-tax to parents who pay tuition fees or school fees. This concession can be availed on tuition fees of two children. But to get this discount, you need to submit proof of enrollment and payment receipts from the institution.
Moreover under Section 80D of the Income Tax Act, a taxpayer is entitled to a tax deduction if he pays health insurance premium. If you have taken out a health insurance policy for yourself, spouse, children and parents, you can claim tax up to Rs 25,000 on the premium. In this case the age of parents should be less than 60 years. If your parents are senior citizens, the tax exemption limit will be Rs.50,000. Employee Provident Fund (EPF) is one of the easiest ways for salaried employees to save tax. In this, tax exemption up to Rs 1.5 lakh is available under Section 80C of the Income Tax Act. Interest earned in PF account is tax free up to Rs 2.5 lakh per annum.
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