Income
tax allowances, as well as deductions of salaried persons | Salaried persons, constitute a major part of the overall taxpayers of the country and their
contribution to tax collection is significant. Income tax deduction provides
many opportunities for tax saving for the salaried class. With these discounts
and rebates and one can significantly reduce his taxes.
Exemption of allowance
House rent allowance
A salaried
person who has rented accommodation can get HRA (house rent allowance) benefit.
However, if you do not live in rented accommodation and still get an HRA, it
will be taxable. If you cannot submit the rent receipt to your employer as
proof of HRA claim,
You can claim
one of the following as an HRA waiver.
A. Total HRA
received from your employer
B. Rent paid
10% less (basic salary + DA)
C. 40% Salary
for Non-Metros (Basic Salary + DA) and 50% Salary (Basic Salary + DA) for Metros
Standard deduction
In Budget
2018, announced a standard discount amounting to Rs. 40,000 for salaried
employees. It was in place of transport allowance (Rs. 19,200) and medical
compensation (Rs. 15,000). As a result, salaried employees can get an additional
income tax exemption of Rs. 5,800 in FY 2018-19.
The exemption
limit has been increased to Rs 50,000 in the interim budget of 2019.
Children's allowance
The employer
can provide an education allowance for your children as part of your salary. Such
allowances received by the employer for the education of children are tax-free.
However, the
employee can claim the maximum amount. 100 per month or Rs. 1200 per annum.
Discounts are allowed for a maximum of 2 children.
Approved deduction
Sections 80C, 80CCC and 80CCD (1)
Section 80C is
the most popular option for reducing the income tax burden. The following are some of
the investments which are eligible for rebates up to a maximum of Rs. 1.5 lakhs
under Sections 80C, 80CCC and 80CCD (1).
Life insurance
premium
Equity Linked
Savings Scheme (ELSS)
Employees
Provident Fund (EPF)
Annual /
Pension Scheme
Payment of
home loan principal
Tuition fees
for children
Contribute to
PPF account
Sukanya
Samridhi Account
NSC (National
Savings Certificate)
Fixed Deposit
(Tax Savings)
Post office
time deposit
National
Pension Scheme
Medical Expenses and
Insurance Premium (Section 80D)
Section 80D is
a deduction that you can claim for medical expenses. One can save tax on
medical insurance premiums paid for the health of oneself, family and dependent
parents.
Section 80D deduction
limits are:
25,000 for
premium for self/family.
Rs 50,000 for
premium for Rupee Senior Citizen Parents.
In addition, health
checks up to Rs 5,000 are allowed and are covered within the overall range.
Discounts up
to 50,000 are subject to medical expenses incurred by senior citizens (60 years
of age or older) or to senior citizen parents if they are not covered by a
Mediclaim policy.
A taxpayer can
claim a maximum discount of 50,000 including the amount of premium and medical
expenses if he is a senior citizen
(60 years or
older). In addition, if he has paid the medical bills of his senior citizen
parents, he can claim an additional discount of up to Rs. 50,000
Your employer
can pay the premium on your behalf and deduct it from your salary. Such premium
paid is deductible under section 80D.
Another key
tax-saving tool is house building loan interest. Homeowners have the option to
claim money 2 lakh discount for home loan interest for the self-acquired property.
If the home property is abandoned, you can claim a deduction for the entire
interest associated with such a home loan.
In addition to
the above, one can claim the principal component of housing loan repayment as a
rebate under section 80C up to a maximum of Rs 1.5 lakh.
Deduction for loans for
higher studies (Section 80E)
The income tax law
provides a deduction for the interest on education loans. Notable conditions
attached to claiming such deductions are that the loan should have been taken
by the person himself or his wife from a bank or financial institution for
higher studies (in
Grants (Section 80G)
Section 80G of
the Income-tax Act, 1961 offers an income-tax exemption to an appraiser who
donates to charities. This discount varies depending on the recipient
organization, which means that anyone can receive a discount with or without a
50% limit on the amount donated.
Deduction on Savings
Account Interest (Section 80TTA)
Section 80TTA
of the Income-tax Act, 1961 offers a rebate of up to Rs.10,000 on income earned
from interest on savings accounts. This discount is available to individuals
and HUFs. If the bank's interest income is less than INR 10,000, the full
amount will be approved as a deduction.
Home Loan Interest
(Section 80EE)
Section 80EE
entitled homeowners to claim an additional exemption of Rs. 50,000 (Section
24) for the EMI interest component of a home loan.
Feature of this Excel
Utility:-
1) This
Excel Utility Prepare Your Income Tax as per your option U/s 115BAC perfectly.
2) This
Excel Utility has all amended Income Tax Section as per Budget 2021
3)
Automated Income Tax Arrears Relief Calculator U/s 89(1) with Form 10E from the
F.Y.2000-01 to F.Y.2021-22 (Updated Version)
4)
Automated Calculation Income Tax House Rent Exemption U/s 10(13A)
5)
Individual Salary Structure as per the Govt and Private Concern’s Salary
Pattern
6)
Individual Salary Sheet
7) Individual
Tax Computed Sheet
8)
Automated Income Tax Revised Form 16 Part A&B for the F.Y.2021-22
9)
Automated Income Tax Revised Form 16 Part B for the F.Y.2021-22
10)
Automatic Convert the amount in to the in-words without any Excel Formula
