Often, investment for most individuals begins and ends with tax planning. Although it is pertinent to avail tax breaks, this should not be the sole focus. Start by jotting down your key financial objectives, the tentative time of money requirement and the corpus needed to achieve those goals. One can use tax saving investments effectively, to achieve financial goals. For example, one can take a children's plan that also provides tax benefit. Consider the impact of inflation on your needs. After your first few working years, as income goes up, it is wise to invest beyond one's tax saving investments to achieve your goals. Also, evaluate the life cover requirement, while planning for your taxes. We are giving below a brief on some of the Popular allowance / Exemption and deductions, benefit of which can be taken by the salaried taxpayers to reduce their tax burden.
Similarly, salaried employees staying in rented apartments can claim exemption under Section 10(5) of the Act in respect of house rent allowance by making the HRA a component of there salary.
Some of The Popularly Known Exemptions/Reimbursements
Minimum of –
1. Actual HRA
2. Rent Paid – 10% of Basic
3. 40a% of Basic (Non-Metros) or 50% of Basic (Metros)
Rs 800 / Month (1600 Per Month from A.Y. 2016-17)
Two trips in a block of 4 Yrs Amount not exceeding Air Economy or Rail AC I Fare shall be for shortest distance and for a single destination
Taxability of Leave Travel Allowance (LTA) – Section 10(5)
Medical Reimbursement – Section 17(2) proviso
Up to Rs. 15,000 in aggregate in a year
Section 80C allows a maximum limit of Rs 1.50 lakh across investments ranging from provident fund, PPF, infrastructure bonds, fixed deposits (5 years or more), Sukanya Samriddhi Account, NSC, insurance/pension plans, unit linked insurance, equity linked savings scheme etc. It also includes tuition fees of your children and the repayment of principal on your housing loan. Deduction under section 80C and Tax Planning
The interest component on your home loan has a separate limit of Rs 2 lakh. Income Tax Benefits from House Property and Loan
Medical premia upto a maximum of Rs 15,000 (Rs. 20000/- wef A.Y. 2016-17) qualifies for deduction, with an additional Rs 15,000 for parents. Additional deduction of 20,000/- (Rs. 30000/- wef A.Y. 2016-17) could be availed in case of a senior citizen.You can claim a separate deduction for medical premium of your parents. Deduction U/s 80D for Mediclaim Premium to Individual, HUF, Senior Citizens
A person who have spent money on the maintenance (including medical treatment) of dependant persons with disability, could avail deductions 80DD of the Act. Section 80DD Deduction- Medical expense of disabled dependent.
Individuals paying interest on education loan should obtain the interest payment certificate under section 80E of the Act. Section 80E – Deduction for Interest on education Loan
Those who are suffering from not less than 40 per cent of any disability is eligible for deduction to the extent of Rs. 50,000/- and in case of severe disability to the extent of Rs. 100,000/- under section 80U of the Act. Deduction U/s. 80U for disabled persons
Top 10 Tax Saver Mutual Funds to invest in India for 2016
Best 10 ELSS Mutual Funds in india for 2016
1. BNP Paribas Long Term Equity Fund
2. Axis Tax Saver Fund
3. Franklin India TaxShield
4. ICICI Prudential Long Term Equity Fund
5. IDFC Tax Advantage (ELSS) Fund
6. Birla Sun Life Tax Relief 96
7. DSP BlackRock Tax Saver Fund
8. Reliance Tax Saver (ELSS) Fund
9. Religare Tax Plan
10. Birla Sun Life Tax Plan
Invest in Best Performing 2016 Tax Saver Mutual Funds Online
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