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Save Money on Your Taxes: Tips for Income Tax Saving

Save Money on Your Taxes: Tips for Income Tax Saving

Income tax is levied on the total income of an individual or a Hindu Undivided Family (HUF) every financial year. The tax is calculated based on the Income Tax Slabs and Rates announced by the government for that particular financial year. The current financial year is FY 2022-23 and the Income Tax Slabs and Rates for this year were announced by the Union Budget.

The financial year 2022-23 (FY23) started from April 1, 2022, and will end on March 31, 2023. The due date for filing income tax returns for FY22-23 is July 31, 2023.

As per the latest changes in the Income Tax Act, individuals who earn an annual income of up to Rs 5 lakh are exempt from paying any income tax. This means that individuals with an annual income of Rs 5 lakh or less will not have to pay any income tax.

Also Read-Section 44ADA: A Simple Guide To Presumptive Taxation Scheme.

Income Tax Saving as Per Indian Act:

1. Exemption for annual income up to Rs 5 lakh:

2. Deductions under section 80C:

3. Deductions under section 80D:

4. Deductions under section 80E:

5. Deductions under section 80G:

6. Deductions under Section 80GG:

7. Deductions under section 80U:

8. Deductions under Section 80TTA:

9. House Rent Allowance (HRA) exemption:

10. Capital gains exemption:

1. Exemption for Annual Income Up To Rs 5 Lakh:

As per the latest changes in the Income Tax Act, individuals who earn an annual income of up to Rs 5 lakh are exempt from paying any income tax. This means that individuals with an annual income of Rs 5 lakh or less will not have to pay any income tax.

2. Deductions Under Section 80 C:

Investments in certain specified instruments like PPF, NSC, ELSS, etc. up to a maximum of Rs 1.5 lakh in a financial year are eligible for deduction under section 80C of the Income Tax Act.

3. Deductions Under Section 80 D:

Payments made towards health insurance premiums, preventive health check-ups, etc. up to a maximum of Rs 1.5 lakh in a financial year are eligible for deduction under section 80D of the Income Tax Act.

4. Deductions Under Section 80 E:

Interest paid on educational loans up to a maximum of Rs 1.5 lakh in a financial year is eligible for deduction under section 80E of the Income Tax Act.

5. Deductions Under Section 80 G:

Donations made to certain specified institutions and funds are eligible for deduction under section 80G of the Income Tax Act. The maximum deduction that can be availed is 50% of the donation amount.

6. Deductions Under Section 80 GG:

Rent paid by an individual who does not receive House Rent Allowance (HRA) from his/her employer is eligible for deduction under section 80GG of the Income Tax Act. The maximum deduction that can be availed is Rs 5,000 per month.

7. Deductions Under Section 80 U:

Individuals with a disability are eligible for a deduction of Rs 75,000 under section 80U of the Income Tax Act.

Also check-Challan 280-How to Pay Advance Tax Online or Offline? Due Dates

8. Deductions Under Section 80 TTA:

Interest earned on savings account up to a maximum of Rs 10,000 in a financial year is eligible for deduction under section 80TTA of the Income Tax Act.

9. House Rent Allowance (HRA) Exemption:

If you are staying in a rented house and receiving House Rent Allowance (HRA) from your employer, a part of your HRA is exempt from tax. The exemption is calculated based on the following formula:

HRA exemption = Minimum of (a) HRA received, (b) 40% of (Basic salary + DA), (c) Rent paid – 10% of (Basic salary + DA)

10. Capital Gains Exemption:

Short-term capital gains on the sale of equity shares and equity mutual fund units that are listed on a recognized stock exchange and are held for a period of not more than 12 months are exempt from tax. Long-term capital gains on the sale of equity shares and equity mutual fund units that are listed on a recognized stock exchange and are held for a period of more than 12 months are subject to tax at the rate of 10%.

Conclusion:

Income taxes in India are levied by the Central Government and the state governments on the taxable income of individuals and companies. Taxes are also levied on certain goods and services. The tax system in India is quite complex, with different tax rates and Slabs for different categories of taxpayers. However, there are certain ways in which taxpayers can save taxes and reduce their tax liability.

The Indian government has proposed several changes to the income tax act for the financial year 2022-23. These changes are aimed at providing relief to taxpayers and promoting growth in the economy. Some of the key changes include increasing the basic exemption limit, increasing the deduction for health insurance premiums, and providing a deduction for interest on housing loans. These changes are expected to provide significant tax savings for taxpayers and help boost the economy.

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