Understanding practical tax-saving strategies becomes essential as your income passes the 10 lakh barrier. Fortunately, there are several investment strategies that can assist reduce your tax obligations within the parameters of Indian income tax laws.
The most effective and advantageous way to lower your overall tax burden among these tactics is through tax-saving investments. Knowing how to save tax for salary above 10 lakhs, what tax saving schemes can be beneficial, the best fixed deposit option to save tax, and more, is very crucial for every taxpayer, existing and new.
When you are planning how to calculate income tax on salary above 10 lakhs, it's important to note that various salary components offer tax deductions. Here's a look at these potential deductions to consider when planning your taxes for an income of over Rs 10 lakhs:
You can get tax benefits on health insurance premiums for you, your family, and your parents under Section 80D. The amount of deduction varies with the age and payment mode of the insured. You can save up to Rs 1 lakh tax if you and your parents are senior citizens.
By investing in a variety of assets including EPF, PPF, ELSS, SSY, NSC, and more, you can receive an annual tax advantage of up to Rs 1,50,000.
Home loan deduction is one of the best option to save tax under 80c. In accordance with Sections 80C and 24b of your house loan, you are eligible for deductions of up to Rs 1.5 lakhs for the principal and Rs 2 lakhs for the interest, respectively.
Life insurance policy proceeds that mature are not subject to tax. Policies written after April 1, 2013, must have a sum assured of at least 15% of the policy's value for people with disabilities or particular diseases.
If you have taken out a loan to pay for higher education, you may deduct interest for 8 years beginning with the year of repayment.
Tax advantages of 50% to 100% of the donation amount are available for donations given to non-profit organisations.
You may be eligible for a tax relief of Rs. 75,000 for a 40% disability and Rs. 1,25,000 for an 80% disability if you have dependents who are disabled and have medical expenditures.
Understanding which are the best tax saving instruments and leveraging these tax-saving methods is vital for individuals earning above 10 lakhs annually. You can efficiently optimise your finances and reduce your tax burden by making wise investments, taking advantage of exemptions, and staying up to date on the most recent tax legislation.
If you want to start your tax saving by investing in ELSS funds then Fi Money is a good place to start. Mutual Fund investments on Fi are commission-free. With its intuitive user interface, suited for novice & seasoned investors, you can select from over 900 direct Mutual Funds. Plus, Fi's 100% secure as it functions under the guidance of epiFi Wealth, a SEBI-registered investment advisor. To help simplify the steps involved, you can invest daily, weekly, or monthly via automatic payments or SIPs — created with one screen tap. Moreover, Fi offers 100% flexibility with zero penalties for missed payments.
At the end of each assessment year, you can submit your yearly tax returns to request deductions under Section 80C.
No, regardless of how many investment plans you have, Section 80C only allows you to deduct up to Rs. 1.5 lakh.
Employee Provident Fund (EPF), Public Provident Fund (PPF), Equity Linked Savings Scheme (ELSS), National Savings Certificate (NSC), and Sukanya Samriddhi Yojana (SSY) are best option to save tax under 80c.
Yes, it is possible to get a full tax exemption of 100%, but doing so requires careful tax planning and wise investments.