If you’re a salaried person there are many ways to save taxes
Income from interest on savings account
If you are not spending all your money and you usually hold up investments for the last minute, chances are your savings account will swell. The bank will pay you a meagre interest on this amount.
However, did you know that interest income on saving accounts is not taxable up to Rs 10,000? Even if you have earned Rs 15,000 as interest from all your savings accounts then you have to pay tax only on the balance.
Profit from selling shares or equity mutual funds
If you’ve sold investments held in stocks or mutual funds for more than one year, profits earned on those are tax free returns. For example, you invested Rs 100,000 in equity and in 11 months it is worth Rs 120,000 and if you were to sell all of them, then you would have to pay a tax on the Rs 20,000 profit. However, if you hold it for another month, then you are not liable to pay any tax on the profit.
Amount received as gifts
At the time of your wedding, if you have received gifts from your relatives, friends and family in cash or cheque, then the entire amount is tax free.
Claim benefits under HUF account
Opening an HUL account will help you save taxes on income earned from secondary sources.
If you have any additional sources of income apart from your job, you can claim tax benefits by setting up an HUF account.
While you will have to pay tax on your salary as per the marginal tax rate, the additional income can be taken in the name of a separate HUF account. A Hindu Undivided Family (HUF) status is available to Hindu, Sikh and Jain families in India.
The Income Tax department considers HUF as a separate entity for taxation purpose, as a result you will have to get a separate PAN and bank account number.
Money you’ve inherited
There is no inheritance tax in India. So anything you get from your deceased parents or relatives as per their legal will is fully exempt from tax.
Tax saving options under section 80C
Under Section 80C, you can earn a maximum tax deduction of up to Rs 150,000 by investing in any one or all of the following. Note that, no matter how much you invest, your tax exemption will not exceed Rs 150,000. You can invest in the following:
Tax saving on home loan
Even though a home loan is a liability, it can earn you tax deductions. The principal amount repaid in the current financial year is included under Section 80C, whereby you can claim a deduction of up to Rs 150,000.
The interest portion of your home loan too is eligible for deduction up to Rs 150,000 under Section 24. If you get another loan for a second house you can claim income tax deduction on the interest payment of this loan too. And that too without any upper limit.
Tax saving on education loan
Under Section 80E the interest paid on an education loan is fully non-taxable up to any amount. You can also claim this deduction if the education loan is taken for your spouse or children.
Illustration: Uttam Ghosh/Rediff.com