Individual taxpayers are hoping for revision in income tax slabs and individual rates as Finance Minister Nirmala Sitharaman presents her Budget speech today. FM Sitharaman is likely to come up with proposals that may leave more income in the hands of taxpayers, especially salaried individuals.
Currently, there are various exemptions to minimise tax liability. One can claim perks, perquisites or tangible benefits that he/she is entitled under the Income Tax Act.
House rent allowance
Salaried individuals, who live in rented houses, can claim House Rent Allowance (HRA) to lower their taxes - partially or wholly. If you are living in rented house and are making a payment in excess of Rs 1 lakh annually then you can claim exemption by providing the landlord's PAN.
In a bid to promote education, the government has allowed tax breaks and income tax exemption on tuition fees paid by the individual for their children. Any allowance received for education up to Rs 100 per month up to maximum of two children and hostel stay of employees' children up to Rs 300 per month up to maximum of two children from the employer can be claimed u/s 10(14).
Leave Travel Allowance
Under this, an exemption for allowance/assistance is received by the employee from his employer for travelling on leave. The exemption is available for two trips in a block of 4 years on the actual travel costs i.e., the air, rail or bus fare incurred by the employee. This exemption is also limited to LTA provided by the employer.
FULL COVERAGE: Union Budget 2020
Investment under Section 80C
To save more on income tax, you can invest Rs 1.5 lakh under Section 80C of the Income Tax Act in tax-saving bank deposits, Public Provident Fund (PPF), National Savings Certificate (NSC), equity-linked savings schemes (ELSS), subscription to notified securities and deposits schemes, etc.
Claim medical insurance under Section 80D
You can also claim a deduction of up to Rs 25,000 in a financial year for medical insurance premium, provided the instalments is for you, your spouse, and your dependent children, as per section 80D. (Rs 30,000 in case the age of insured is 60 years or more).
By Chitranjan Kumar
Copyright©2021 Living Media India Limited. For reprint rights: Syndications Today