How do you save tax in India?

Answer 1

Savings In light of Indian Income Tax Deductions in Financial Year 2009-2010

Savings Under Section 80C of Indian Income Tax Deductions in Financial Year 2009-2010 is maximum upto Rs 1,00,000 which can be done through

1. PPF -Any contributions to Provident Fund, Voluntary provident Fund (VPF) or savings made in Public Provident Fund (PPF Account).

2. Life Insurance Premiums: Any Life Insurance premiums (for one or more insurance policies) paid by you for yourself, your spouse or your children.

3. ELSS Equity Linked Saving Schemes: Any investment made in certain Mutual Funds called equity linked saving schemes qualifies for Section 80C deduction.

4. Bank Fixed deposits or Term deposits of >5 years

5. Principal part of EMI on Housing Loan

6. Tution Fees: Amount paid as tution fee for the education of two children of the assessee

7. Other 80C deductions: Amount saved in National Saving Certificate (NSC), Infrastructure Bonds or Infra Bonds, amount paid as stamp duty and registration charges while buying a new home are also eligible for income tax deductions under Section 80C of Indian Income Tax Act.

Savings Under Section 80D of Indian Income Tax Deductions in Financial Year 2009-2010 ican be done by claiming medical and health insurance maximum upto Rs 30,000 (self including family + parents) under the following terms

1. Total amount of premium paid for health insurance of family (meaning spouse + children), or Rs. 15,000 , whichever less.

Total amount of premium paid for health insurance of assessee parents or Rs. 15,000, whichever less.

Savings Under Section 80DD of Indian Income Tax Deductions in Financial Year 2009-2010 can be done by claiming medical expenditure for a dependents who are disabled. Here dependent means spouse, children, brothers, sisters or any one of them. The maximum tax deduction provided by Section 80DD is Rs. 50000 in case of ordinary disability and Rs. 75000 if the disability is severe. The definition of severe disability is as defined in the official page of Indian Income Tax Act.

Savings Under Section24 of Indian Income Tax Deductions in Financial Year 2009-2010 is on the interest payable on this home loan taken for new house or for renovation. Maximum deductible amount, under Section 24 is Rs. 1,50,000

Savings Under Section 24 of Indian Income Tax Deductions in Financial Year 2009-2010 can be claimed on HRA which must be the minimum amount value of the following three conditions

1. Rent Paid minus 10% of assessee salary.
2. 25% of assessee gross total income.
3. Rs. 2000/- per month.

Savings Under Section 80E of Indian Income Tax Deductions in Financial Year 2009-2010 can be claimed for any amount of interest paid on educational loan taken for assessee own higher education or higher education of spouse or children is deductible from assessee taxable income.

Savings Under Section 80E of Indian Income Tax Deductions in Financial Year 2009-2010 can be claimed towards donation maximum upto 50% of donated amount in Prime Minister's Relief Fund, National Children Foundation, any University or educational institution of 'national eminence', etc.

Savings Under Section 80U of Indian Income Tax Deductions in Financial Year 2009-2010 is for person with a disability. An individual who is suffering from a permanent disability or mental retardation as specified in the persons with disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 or the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999, shall be allowed a deduction of Rs 50,000. In case of severe disability it is Rs. 75,000.