Paying income tax is our duty because it helps our country to grow. But if given an option to not pay income tax or to pay less amount as income tax, I am sure nobody wants to loose this opportunity.

Today in this article, I am going to share some common ways by which we can save some amount of tax just by keeping in mind some important points while filing income tax return.

As per income tax slab rates, for the first Rs. 2,50,000/- there is no tax liability, it means no tax is required to be paid if income of a person is upto Rs. 2.5 Lakhs.

However Income Tax Department  provides cetrtain deductions under Chapter VIA and certain reimbursements & allowances which helps in saving tax to a certain extent.

So I  will try to explain some common deductions in an easy manner so that you may understand it and apply it practically. Even if you face any confusion then you may mail me or ask query at comment box

1. Medical Reimbursement:

If your offer letter contains medical reimbursement as a part of salary breakup then you can claim upto Rs.15,000/- as reimbursement of medical expenses of self and dependents also.

But for this you will have to submit medical bills to your company.

2. HRA:

Before filing your Income tax return, pls must assure that your company provides you House Rent Allownace to compensate for your rent expenses.

HRA calculation will be covered in next article along with other important calculation of income tax.

3. Conveyance Allowance:

It is an allowance provided to the employees to meet conveyance expenses incurred from moving to office from residence. This allowance can also be checked from your salary breakup. If employer provides transport facility then this allowance cannot be claimed.

Rs. 19,200 per annum is provided as conveyance allowance.

4. Employee Contribution to PF:

Both employer and employee contribute a 12% equivalent of the employee’s basic salary every month toward employee’s pension and provident fund. An interest of about 8.5% gets accrued on it. This is a retirement benefit that companies with over 20 employees must provide.

5. Professional Tax:

This tax is levied by state. The maximum limit is Rs.2,500/-. It is deducted by the employer from the salary of employees and deposited  with the State Government. This can be claimed as a deduction while filing income tax return.

6. Deduction u/s 80C:

By investment in following tax saving schemes  upto a maximum limit of Rs.1,50,000/- an individual can save taxes

  • PPF (Public Provident Fund)
  • EPF (Employees’ Provident Fund)
  • Five year Bank or Post office Tax saving Deposits
  • NSC (National Savings Certificates)
  • ELSS Mutual Funds (Equity Linked Saving Schemes)
  • Kid’s Tuition Fees
  • SCSS (Post office Senior Citizen Savings Scheme)
  • Principal repayment of Home Loan
  • NPS (National Pension System)
  • Life Insurance Premium (Read : ‘Best Term insurance plans‘)
  • Sukanya Samriddhi Account Deposit Scheme

7. Deduction u/s 80D:

Deduction u/s 80D on health insurance premium is Rs 25,000. For Senior Citizens it is Rs 30,000. For very senior citizen above the age of 80 years who are not eligible to take health insurance, deduction is allowed for Rs 30,000 toward medical expenditure

8. Deduction u/s 80DD:

You can claim up to Rs 75,000 for spending on medical treatments of your dependents (spouse, parents, kids or siblings) who have 40% disability. The tax deduction limit of upto Rs 1.25 lakh in case of severe disability can be availed.

To claim this deduction, you have to submit Form no 10-IA.

The above given list is not exhaustive one i.e. this not complete list, I have discussed here only some common deductions and allowances. If you want detailed discussion on any of the above deductions or allowances then you can ask me on my email id: taxitrj1@gmail.com or write at the comment box.

Author Bio

Qualification: CA in Practice
Company: JItender Kanswal & Co
Location: Dehradun, Uttarakhand, IN
Member Since: 31 Jan 2018 | Total Posts: 6
A qualified Chartered Accountant having around 5 years of experience in accounts & finance field. Skilled in project analysis, variance analysis, project report preparation & financial reporting. View Full Profile

My Published Posts

More Under Income Tax

Posted Under

Category : Income Tax (27247)
Type : Articles (16742)
Tags : Tax Planning (73)

28 responses to “How to save income tax (For Salaried Individuals)”

  1. Pal says:

    I am employee & studying 3yr polytech reg.course. my said course fee is countable for saving or not.

    • cajitender1986 says:

      No deduction will be allowed for expenses on own study. Only childrens’ tution fees is allowed as deduction u/s 80 C

  2. Paraw Tudu says:

    Food Allowance is Exempted ?

    Please replay me in given E-mail ID

  3. cajitender1986 says:

    Dear all thanks you all for your valuable time. If you have any queries than you can mail me at taxitrj1@gmail.com
    & for informational videos pls subscribe my youtube channel ” Free Mein Seekho”. It shares valuable information.

  4. INDRAJEET says:

    Respected sir,
    Please inform that what is criteria of house rent in tax saving,it is above of 150000/- ?

    • cajitender1986 says:

      Dear Mr. Indrajeet,
      First of all I want to clarify that HRA exemption is different from sec 80 C deductions & its limit of Rs 1,50,000/-
      HRA is an exemption u/s 10 from salary.
      Criteria to calculate HRA is as follows:
      Lowest of the following is exempt from tax
      1. Actual HRA received.
      2. Rent paid -10% of Baisc Salary ( it included DA if it is forming part of retirement benefits)
      3. 40 % or 50 % of Basic Salary ( 40 % if non metro cities)

      Thanks you

  5. Ashok Kumar Singh says:

    Need help in Finalizing account

  6. JIGNESH PATEL says:

    In the recent budget FM declared 40K standered deduction, does it replace Conveyance allowance 19200 and Medical Relief of Rs 15000/-
    Please calrify.
    Thanks

    • cajitender1986 says:

      Dear Mr. Jignesh, This will be in lieu of the existing transport allowance and medical expense reimbursement. So it means you will be able to claim extra exemption of Rs 5,800/- from FY 2018-19.

  7. Karan Siingh says:

    In above youo have mentioed against transport allowance of 19200 and medicacal reimbucement of rs 15000/ but the same has already been abloished by our finance minister in recently budget than how can we receive the deduction on the same, pl clarify.

    • cajitender1986 says:

      Dear Mr. Karan,
      yes it is true that transport allowance & medical reimbursement cannot be claimed from FY 2018-19 that’s why standard deduction of Rs.40,000/- is introduced. But for upto FY 2017-18, position us unchanged and you can claim medical reimbursement & transport allowance as usual.

  8. BISWAJIT NAG says:

    NARRATE CLAIM UNDER EDUCATION ALLOWANCE.

    • cajitender1986 says:

      Dear Mr. Biswajit,
      Education allowance, if provided in your salary structure, is exempt upto Rs 100 per month per child up to a maximum of 2 children.
      i.e.both parents can claim separate exemption.

  9. vineet Sugandhi says:

    Respected Sir,
    i want to more information of saving
    tax for salarised individuals in personal

  10. Ramesh M says:

    Hi Sir,

    Iwould like to know is there any limit for Rent paid by employee in Cash…

    some employee showing Agreement copy along with self rent receipt copy and providing owner PAN card as well but making the payment in CASH.. is it fine or we have any limit for this cash transaction

  11. Akshay says:

    medical reimbursement and transport allowance already withdrawn vide budget 2018, hence not available.

    • cajitender1986 says:

      Yes Akshay you are absolutely correct but Standard deduction of Rs 40,000/- in place of medical reimbursement & transport allowance is applicable from next financial year. And this information useful for those individuals who are about to file their ITR for AY 2018-19

  12. Deepak Joshi says:

    Sir i want to more information of saving
    tax for salarised individuals in detail
    further will you please explain me whether
    expenses incurred during the year by any
    salarised individual can claim that expenses
    from his gross salary for example
    car petrol expenses maintenance and repairs of car and other miss expenses

  13. mittal says:

    Respected Sir,
    Whether this form no. 10-IA is mandatory of filing with Income tax return while file Return Electornically with for Section 80 U also or it is sufficient if one has taken this certificate from concerned Medical Authority and Keep with oneself , and whenever required by Income tax Authority, it can be submitted.
    Thanks with Regards,
    Please guide,

  14. mittal says:

    Respected Sir,
    Please tell me about this form no. 10-IA ,performa etc. from what date it has become applicable? Is it mandatory to fill this form while file Return Electornically, if not submitted this form no. 10-IA for fy. Ended 31.03.2016 and 31.03.2017, any remedy for that?

  15. Kirti Kumar says:

    Thanks for update. Pls provide the complete detail.

Leave a Reply

Your email address will not be published. Required fields are marked *