Savings
How to Save Income Tax for Salaried & Professionals for FY 2019-20?
02 May 2019 4 min read
Savings: How to Save Income Tax In India

Do you belong to the group of salaried and professionals? If yes, you have enough armoury up your sleeves to save income tax in this financial year 2019-20.

Before diving into more details, let’s have a close look at the Income Tax Slab 2019-20 for three major categories of individual taxpayers.

  1. For Category 1: Individuals and HUF (Hindu Undivided Family)  below 60 years old

Income Tax Slabs

Tax Rate

Health and Education Cess

Up to Rs.2.5 lakh*

Nil

Nil

Rs.2,50,001 to Rs.5 lakh

5%

4% of Income Tax

Rs.5,00,001 to Rs.10 lakh

20%

4% of Income Tax

Above Rs.10 lakh

30%

4% of Income Tax

 

*The interim budget presented on 1st of February, 2019 has provisioned a complete tax rebate for individuals with a net taxable income (adjusted income, post deductions) of Rs 5 lakhs or below. This is because the earlier limit of maximum tax rebate under section 87 A has been extended from Rs 2,500 to Rs 12,500. Therefore, an individual with a net taxable earning up to Rs 5 lakhs will be now able to claim a tax rebate up to Rs 12,500 and thus will be exempted from all tax effectively.

  1. For Category 2: Senior citizens who are above 60 years but below 80 years

Income Tax Slabs

Tax Rate

Health and Education Cess

Up to Rs. 3 lakh

Nil

Nil

Rs.3,00,001 to Rs.5 lakh

5%

4% of Income Tax

Rs.5,00,001 to Rs.10 lakh

20%

4% of Income Tax

Above Rs.10 lakh

30%

4% of Income Tax

  1. For Category 3: Super senior citizens who are  80 years or more in age

Income Tax Slabs

Tax Rate

Health and Education Cess

Up to Rs. 5 lakh

Nil

Nil

Rs.5,00,001 to Rs.10 lakh

20%

4% of Income Tax

Above Rs.10 lakh

30%

4% of Income Tax

 

Let’s now turn our attention to some of the tax-saving investments and sections applicable for Salaried & Professionals

  1. Sections 80C/80 CCC/80 CCD

These are the most popular sections, with lots of options available to save tax. The maximum exemption limit combining these sections is Rs 1.5 lakhs. You can choose from the below mentioned options to invest in.

  • Voluntary/Employee /Public provident fund(VPF/EPF/PPF)
  • National Savings Certificate(NSC)
  • Sukanya Samriddhi Account
  • Life Insurance Premium
  • Tax Savings FD in Banks/Post offices( for minimum 5 years)
  • Senior Citizens’ Savings Scheme( SCSS)
  • National Pension Scheme (NPS)
  • Pension Plans from Mutual Funds/Life insurance
  • Home Loan principal payment
  • The tuition fee for children( up to 2)
  • Equity Linked Savings Scheme(ELSS)
  • Central Govt. Employee Pension Scheme
  • Registration Fee and stamp duty of a house
  1. Section 80 CCD (1B)

This section allows an additional deduction up to Rs 50,000 for all investments in the National Pension Scheme.

  1. Section 24 (interest payment on a home loan)

The interim budget has come up with an interesting benefit for borrowers with two home loans. Previously, if you had multiple properties for self-occupation, only one was considered for taxation purposes (as a self-occupied property).  From the Financial Year 2019-20 onwards, the second house would also be treated as self-occupied –which will effectively remove the tax burden on notional rent. Now you will be at liberty to claim a tax rebate on the interest amount of both the loans, as long as the combined amount is less than Rs 2 lakh.

  1. Section 80 E ( Interest paid on education loan)

The education loan is required to be availed for pursuing only full-time courses (by self, spouse or children) from approved institutions.  This deduction can be claimed for a maximum of 8 years.

  1. Section 80 D (Medical Insurance for self and parents)

Health Insurance/Mediclaim premium paid for self, children, spouse, and parents are deducted (up to Rs 25,000 if you are below 60 years and Rs 50,000 if you are above) under this section. An additional deduction of Rs 25,000 is allowed for health insurance premium paid for dependent/independent parents. (Rs 50,000, if either of them is a senior citizen).

  1. Section 80 DD( Physically Challenged Dependent)

Under this section, you can claim a tax deduction (up to Rs 75,000) for medical treatment and maintenance of any physically challenged dependent (spouse, parents, siblings or children). This limit is extended to Rs 1.25 lakhs in case of severe disability conditions.

  1. Section 80 DDB ( Treatment of serious disease)

You can claim a deduction up to Rs 40,000 towards the treatment of certain serious diseases for self and dependent children, spouse and parents. This limit is extended to Rs 1, 00,000 for senior citizens.

  1. Section 80 U ( Physically challenged taxpayer)

You can claim a deduction up to Rs 75,000 in case you suffer from a normal disability or up to Rs 1.25 lakhs in case of severe disability.

  1. Section 80 G (Donations made to a charitable organization)

You can claim deductions up to 10% of your gross income per annum, for donations made to charitable organizations. Donations made in cheque or cash only are eligible for deduction.

  1. Section 80 GGC ( Donations made to political parties)

      You can claim a 100% deduction, if you make donations to any political party registered u/s 29 A of the Representation of People Act, 1951.

  1. Section 80 GG ( House Rent if HRA is not a part of salary)

    You can claim HRA exemption in income tax if you are not provided House Rent Allowance (HRA) as a salary component by your employer. The following conditions need to be fulfilled-

  • The rent paid should exceed 10 % of your income
  • No one in your family (self, spouse, minor children) should have a house in the city you live in.

Hope the above-mentioned explanations have given you a fair idea on how to save Income Tax.

The experienced financial experts at Afinoz can provide quality advice to you anytime you wish for, at free of cost. Get in touch with us and make a wise decision.