Tax will have to be paid according to the slab on income above Rs 12 lakh annually. However, with tax planning, you can save tax even on income above Rs 12 lakh. Sometimes the tax on your salary can also be zero. Even if your annual salary is Rs 13.7 lakh, you can avoid paying any tax by following some steps.

According to tax experts, to make tax zero on income up to Rs 13.7 lakh per annum, one has to invest in the National Pension System (NPS). In the new tax regime, tax deduction is available on NPS contribution up to 14% of the basic salary (plus DA). This deduction is available under IT Act Tech Section 80CCD (2). However, this deduction is available only when the employer/company provides the facility of investing in NPS to the employee.

This is how you can save tax on an annual salary of Rs 13.7 lakh

Let’s assume that an employee’s annual salary is Rs 13.7 lakh. In this, 50% of the basic salary is Rs 6.85 lakh, so the NPS contribution at 14% will be Rs 95,900. The employee can claim tax deduction on the annual contribution of Rs 95,900 in NPS. If the standard deduction of Rs 75,000 is added to this amount, then the total deduction will become Rs 1.70 lakh. In this way, he will not have to pay any tax.

NPS was started in the year 2004.

Let us tell you that if you also want to get a big pension after your retirement, then National Pension System can be a good option for you. NPS is a government scheme, which is linked to the market. NPS was started by the government in 2004. It was opened for the general public in 2009.

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If you plan properly and use all the exemptions and deductions properly, then you can surely save tax on a salary of up to Rs 12 lakh. For this, you will also have to keep your salary structure such that the tax scope is not high. Usually, at the beginning of the year, there is an option to change the salary structure. You can decide how much money you want in reimbursement and how much money as taxable salary. In reimbursement, options like conveyance, LTA, food-coupon or entertainment, internet or phone bill and petrol are available.

Take full advantage of HRA

Apart from this, there is also an option of HRA for tax saving. For HRA, you have to calculate 3 numbers and whatever is the lowest among them, you will get tax exemption on that.

1. The HRA given by the company in the salary can be claimed.
2. You can claim up to 50% of the basic salary in metro cities and 40% of the basic salary in non-metro cities as HRA.
3. You can claim HRA up to the amount that remains after deducting 10% of the basic salary from your total rent.

If your annual salary is Rs 12 lakh, then you should structure your salary in such a way that HRA is Rs 3.60 lakh, LTA is Rs 10,000 and telephone bill is Rs 6,000. You will get deduction on gross salary in this way-

• Standard deduction under section 16 – Rs 50,000
• Exemption from professional tax – Rs 2,500
• HRA under section 10 (13A) – Rs 3.60 lakh
• LTA under section 10(5) – Rs 10,000
• If you add all the above items, your taxable salary will now be Rs 7 lakh 71 thousand 500 (7,71,500).

The further calculation will be like this:

• Under Section 80C (LIC, PF, PPF, children’s tuition fees, etc.) – Rs 1.50 lakh
• National Pension Scheme (NPS) under Tier-1 under section 80CCD – Rs 50,000
• Health insurance for self, wife and children under 80D – Rs 25,000
• Deduction on health policy for parents (senior citizens) – Rs 50,000

Now the taxable salary will be less than Rs 5 lakh. If the taxable salary is less than Rs 5 lakh, then rebate and basic exemption will be available under section 87A. In this way your tax will become zero. It is worth noting that this formula will work on the old tax regime.

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Save more tax by taking a joint home loan (Tax Saving)

If your wife also earns, then taking a joint home loan is always beneficial. This way, both of you will be able to save tax on your earnings. Because on taking a joint home loan, you can claim separate tax deductions of up to Rs 1.5 lakh on the principal repayment under Section 80C and up to Rs 2 lakh under Section 24(b). Thus, by taking a joint loan, both of you can get a total tax deduction of up to Rs 7 lakh. But remember that unless the property is in joint name, you will not be able to avail this tax benefit.

How can a wife double your income?

To double your income, open separate PPF accounts in the name of both you and your wife and invest in them. You can claim tax benefits on investments up to Rs 1.5 lakh in both the accounts. In this way, you can claim tax benefits on total investments up to Rs 3 lakh. So, your income has doubled, right? (Double your income).

NPS Account in Wife’s Name

Open an NPS (National Pension System) account in your wife’s name as well. By investing in both the accounts, you can claim additional tax benefits of up to Rs 50,000 under Section 80CCD(1B).

Health Insurance Policy in the Name of Wife or Family

You can claim tax deduction under Section 80D on the premium paid for a health insurance policy for your wife and family. Under Section 80D, tax deduction can be claimed on health insurance premium for spouse and family members. But to avail this tax benefit, both husband and wife will have to buy separate health insurance policies.

Benefit of interest deduction on wife’s savings account

Open a separate savings account in the name of your wife. Under section 80TTA, tax benefit is available on interest income up to Rs 10,000 on both the accounts.

In these ways you can save a lot of tax and more tax saving means more income. You can use this money to strengthen your financial portfolio, which can meet many of your needs in the future.

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Tax Saving FD

If you invest money in 5-year FD, then tax exemption of up to Rs 1.5 lakh can be availed under Section 80C of the Income Tax Act. This does not happen in FDs of less than 5 years. You will get 5-year FD at both banks and post offices. 7.5% interest is being given on 5-year FD in the post office. At the same time, the interest rates of FDs with 5-year tenure in banks are different.

ELSS

Equity Linked Savings Scheme is called tax saving mutual funds. Investment in the income tax saving scheme is locked-in for 3 years. After this, the investor can withdraw this money if he wants. A maximum tax exemption of Rs 1.5 lakh can be taken in this. Its return is market based.

Also Read- SIP Investment: Invest only Rs 2000 monthly in SIP mutual fund and get more than 1 crore for retirement planning, know the calculation

NSC

If you invest in the National Savings Certificate Scheme, which is famous as NSC, then you have to do it for at least 5 years. In this scheme, interest is being given at the rate of 7.7%. In this too, income tax benefits are given under 80C.

PPF

Investment in Public Provident Fund has been kept in E-E-E category. Meaning your investment, interest and maturity amount are all completely tax free. This scheme matures in 15 years. If you want, you can also get it extended to take advantage of it. 7.1 percent interest is being given on this scheme.

NPS

The National Pension System is also a government scheme which is market linked. In this, you are given a retirement fund at the age of 60, along with 40 percent of your total income is used to buy an annuity, which gives you pension. This scheme is also very good in terms of saving tax. By investing in NPS, you can claim a total tax deduction of up to Rs 2 lakh – Rs 1.5 lakh under Section 80C and an additional Rs 50,000 under Section 80CCD (1B).

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Otherwise money will be deducted from your account later. If you have invested in FD scheme in any bank, then it is necessary to fill Form 15G and Form 15H for tax saving on FD. Without this, your TDS will be deducted on the interest earned on FD.

Money will be deducted from FD
According to income tax rules, customers investing in FD schemes have to submit Form 15G and Form 15H to the bank at the beginning of every financial year. People below 60 years of age have to fill and submit Form 15G. At the same time, people above 60 years of age have to claim tax exemption by submitting Form 15H. TDS will not be deducted by submitting these forms.

Who can submit Form 15G and Form 15H?
People whose age is less than 60 years can fill and submit Form 15G. At the same time, people above 60 years of age can submit Form 15H to claim tax exemption on fixed deposits. If you earn more than Rs 40,000 interest on FD in a financial year, then in such a situation you can claim tax exemption through this form. You will not have to pay TDS on submission of this form. If you do not do this, you will have to pay tax on interest earned on more than Rs 40,000.

e-filing ITR : You will be able to check income tax notices in one click, this facility comes on the portal

The post Tax Saving Tips : If you want to save tax on bank FD interest then do this immediately, otherwise you will incur loss. first appeared on Rightsofemployees.com.

This FD will give you the benefit of returns along with tax saving. Under this, you can claim exemption under Section 80C of the Income Tax Act, 1961. Tax benefits on fixed deposits are given on a lock-in period of five years. Under this, you can save tax up to Rs 1.5 lakh. Up to Rs 1.5 lakh can be saved by investing in it during every financial year. Here is information about some banks, which will give you higher interest.

How long to invest to save tax

If you are planning to invest in this financial year to save tax, then you will have to invest by March 31, because the new financial year will start from April 1. In such a situation, you should not wait for the last moment to save tax.

These banks are giving more interest on tax saving FD 

• 7% interest on Axis Bank five year FD
• Bandhan Bank is giving 5.85 percent interest.
• Bank of Baroda is giving 6.5% interest on tax saving FD
• Canara Bank will give 6.5% interest on tax saving FD
• Central Bank of India will give 6.25% interest on tax saving FD.
• DCB Bank is giving 7.6 percent interest.
• Federal Bank will give 6.6 percent interest.
• HDFC Bank will give 7% interest on tax saving FD.
• ICICI Bank will also give 7% interest on tax saving FD.
• Punjab National Bank will give 6.5 percent interest.
• State Bank will give 6.5 percent interest.
• Yes Bank is giving 7% interest.

The post SBI, HDFC Bank, ICICI Bank and PNB, know who is paying more interest on tax saving FD first appeared on Rightsofemployees.com.