What is Income Tax? And what is tax concession? How to save IT?
Posted on: 10/Apr/2017 5:47:53 PM
Is there any scope that we can make a profit out of saving from paying Income Tax? Yes, it is possible to achieve this - this requires proper guidance. In the first place, you have to know all about how and where to invest and the payment of Income Tax to an optimum degree.
The financial year starts in the month of April. It is very much doubtful if most of us give a thought about the investments required to save Income Tax. It is a crucial aspect that thinking about the investment at the very last moment - investment at the very last moment may lead to financial difficulties.
As the time is short, it may also be difficult to choose the right type of investment.
Let us consider an instance - you are below 60 years of age and the annual income exceeds Rs. 2.5 Lakhs. Then, you need to pay Income Tax. There are avenues to avoid paying this Income Tax. However, this will entail some expenses and some investments. This will facilitate the permanent safety of your hard-earned money.
If a person earns a monthly salary of Rs. 35000, it works out to an annual salary of Rs. 4.2 Lakhs.
In case, a Provident Fund of Rs. 36000 has been taken for that year earning and also in case an amount of Rs. 1.40 Lakhs has been paid for the Principal and interest of the Housing Loan take, there will be no need to pay any Income Tax.
When the amount balance after taking into account all types of deductions mentioned as above exceeds Rs. 2.5 Lakhs, then you need to pay Income Tax. However, if this tax to be paid is converted as savings, it would be beneficial – no tax need to be paid and then you have made your savings for future and any emergency.
Medical Insurance is essential for everyone. Every member of the family must be covered by medical insurance.
Also, out of the amount paid as premium for life insurance under the conditions of section 80C, a tax concession up to Rs. 1.5 Lakhs can be availed.
If there is a medical insurance coverage for the taxpayer and all members of his family, out of the premium paid for this purpose, a concession of up to Rs. 25000 can be availed under section 80D. If the taxpayer has covered his parents, a tax concession of up to Rs. 25000 can be availed from this parental medical insurance coverage.
If a Housing Loan is taken, there is IT concession under Section 80C for the principal. Under Section 24, there is a special concession for IT for the interest on housing loan. If residing in the house for which housing loan has been taken, a maximum concession of up to Rs. 2 Lakhs can be availed for that financial year. If the house has been rented, then tax concession can be availed for the whole interest amount.
If both husband and wife are employed, it would be advisable to take a joint loan for housing. This would facilitate claiming tax concessions for both the husband and wife individually while filing the Income Tax returns.
Thus, there are many avenues to avoid paying Income Tax and make this as a better saving.
