Skip to main content

How to Save Maximum Income Tax? Tax Saving Options above One Lakh Limit - Part I

You can save considerable amount of tax if you plan your investments early in the financial year.

As per income tax act under section 80C, individuals can invest up to Rs 1,00,000 in various tax savings schemes and thus save a maximum of Rs 30,300(depends on your tax slab). Best part is, most of us are not aware of other income tax sections to save tax above this one Lakh limit!

Before proceeding with how to save maximum income tax, let us take a look at the tax slabs for the financial year 2011-2012:

Click here for the tax slabs for the financial year 2013-2014.

Income tax slabs - General Category for the FY 2011-2012

Income tax slabTax
0 to 1,80,000No tax
1,80,001 to 5,00,00010 percentage
5,00,001 to 8,00,00020 percentage
Above 8,00,00030 percentage

Income tax slabs - Women for the FY 2011-2012

Income tax slab (in Rs.)Tax
0 to 1,90,000No tax
1,90,001 to 5,00,00010 percentage
5,00,001 to 8,00,00020 percentage
Above 8,00,00030 percentage

Income tax slabs - Senior citizen(60 to 80) for the FY 2011-2012

Income tax slab (in Rs.)Tax
0 to 2,50,000No tax
2,50,001 to 5,00,00010 percentage
5,00,001 to 8,00,00020 percentage
Above 8,00,00030 percentage

Income tax slabs - Very Senior citizen for the FY 2011-2012

Income tax slab (in Rs.)Tax
0 to 5,00,0000 percentage
5,00,001 to 8,00,00020 percentage
Above 8,00,00030 percentage

Now let us go through various sections in India Income Tax Rules to find out how we can save maximum tax. Assuming you are under general category and falls in the upper tax slab, i.e, 30%:

House Rent for HRA exemption u/s 10(13A) of Income Tax Act, 1961

Proof of Rent Paid should give detail of:
  • Name and address of landlord
  • Period for which rent paid & amount (monthly rent )
  • Address of rented premises for which rent paid
  • Signature of landlord
  • Name of employee
  • Revenue stamp on Rent receipt is mandatory if amount is above 5,000/-.*
  • PAN of the landlord / Declaration from landlord incase the monthly rent exceeds 15000/-
* Note :- Affixing of revenue stamp is not required in the city of Bangalore.

Section 80EE - Declare Additional Rs. 1Lakh

Section 80C

  • Public Provident Fund (PPF)
  • Provident Fund (PF)
  • Life Insurance Premium - Benefit can be given for 1) yourself, 2) spouse, and child (married / unmarried, dependent / not dependent). Premium paid on exceeding 20% of sum assured is not eligible for deduction. Also, no deduction is available if the duration of the policy is less than 5 years.
  • Equity Linked Saving Schemes - ELSS
  • Unit Linked Insurance Plan - ULIP
  • Bank Fixed deposits or Term deposits for more than 5 years - You need to submit a copy of FDR certificate which states the period of investment, amount invested, and name of the person who has taken fixed deposit.
  • Principal part of EMI on Housing Loan - You can save up to Rs. 1 Lakh each year irrespective of your tax bracket, only if the property is for your own use. Other than self-occupied, if the property is in a different city than where you reside currently, you can rent it out. It includes principal amount of housing loan re-paid and expenses incurred for transfer of title of house property such as registration charges, stamp duty, brokerage etc provided the same are paid in the current financial year. Deduction is allowed on the basis of re-payment certificate provided by the bank / financial institution / person to whom loan is re-paid.
  • Tuition Fees - Deduction of tuition fees paid during the current financial year is allowed for maximum two children. Also, benefit is available only for tuition fee component of the total fee and not of other constituents like Building fund, Bus fee etc. Copy of current year receipt from university / Collage / School / other education institute situated in India will be considered. In addition, it should have been paid for a full education. Play School fee is considered only if registered with a recognized Board or University.
  • National Saving Certificate - only in your name
  • Interest accrued on NSC - Interest on NSCs which has been purchased in earlier years and which is being re-invested qualifies for benefit. Submit copy of NSCs of earlier years not earlier than the year 2005.
  • Stamp duty and registration charges paid while buying a new home
  • Any contribution to an approved superannuation fund
  • Bonds - issued by national bank of agriculture and rural development.
  • Tax saving Mutual funds - Considered only if its in your name
  • Senior citizens Saving Scheme
  • Post office Time Deposit

Go to Tax Saving Above One Lakh Limit - Part II

Part II of this article explains various tax saving options above One Lakh limit.

Comments

  1. very informative article. thank you.

    ReplyDelete
  2. very useful article. I literally avoided calling an auditor for help, after reading this article. I was just able to submit my documents very easily, because I knew what i need to submit!!:) thanks a lot.

    ReplyDelete
  3. Thanks. very good attempt

    ReplyDelete
  4. very good @one place information

    ReplyDelete
  5. Informative piece

    ReplyDelete
  6. Please give some thub rule for Tax saving for different age bracket and income. It will help many people as Agents and Financial Advisors never think for the customers /investors they look their profit

    ReplyDelete
  7. This blog contain the information of maximum tax saving. I came to know that how i can save my maximum tax under Section 80c of income tax act. Thanks for sharing vast knowledge about tax saving.

    ReplyDelete

Post a Comment

Did you enjoy this post? Why not leave a comment below and continue the conversation, or subscribe to our feed and get articles like this delivered automatically to your feed reader? Like our Facebook Page.

Popular posts from this blog

HDFC Bank introduces Missed Call Service to know Account Balance

Missed call is a powerful business tool in developing countries like India where customers give a miss call to specific phone numbers for getting account details, providing feedback, voting etc. On receiving a missed call from a registered phone number, the underlying app performs a phone number lookup and sends the data to the caller via text message(SMS) or records the call details for future processing.HDFC Bank recently introduced missed call service for its retail customers which allows to retrieve bank account details, mini statement etc. by simply giving a miss call to their toll free numbers.Following services are now available: 1800 270 3333 - Account Balance 1800 270 3355 - Mini Statement 1800 270 3366 - Request for new Cheque Book 1800 270 3377 - Request for Bank account statement Also you can download HDFC Mobile Banking Application by giving a missed call to : 1800 270 3344. Other banks providing missed call serviceAxis bank(known as Axis Dial) - 09225892258Bank of India…

Induction Cooker Showing an Error Code? Induction Cooker Error Codes Explained

Are you searching for Induction Cook-top error codes? Here you can find the error codes of all popular induction cooktops and how to troubleshoot it.

These are for your reference only, do not try to open your cooktop without proper safety measures, we advise you to call the service person if any servicing is needed.

If you want to know how Induction Cook-top works, read our previous article titled What is Induction Cooker? How Induction Cooker Works?.

Whirlpool Induction Cooker Error CodesError CodeErrorSolutionF0An internal error was detected.Disconnect power. Wait 5 seconds before reconnecting power. If the symbol appears again, call for service.F2The surface cooking area is too hot and has turned off.Remove the pans from the surface cooking area. "F2" will disappear when the surface cooking area has cooled. If you turn the surface cooking area back on and "F2" reappears, the cooktop is still too hot. Turn off the surface cooking area and allow it to cool.F4The po…

LICHFL - Generating Home Loan Statements Online

Generating an online statement from LIC Housing Finance Ltd is very easy, simply follow the below steps to create an online account with LICHFL and generate statements online! You may use the online generated statement as a proof for principal paid for a housing loan(under section 80C) and interest paid(under section 24) while filing income tax returns.Want to know how to save maximum income tax? Read our most read article how to save maximum income tax(opens in new tab).Before reading further, make sure you have the following information with you: Your Loan Account NumberSanctioned AmountStep 1 - Open LICHFL websiteVisit LICHFL website and click on the 'New Customers? Click Here' link(refer the below screenshot). Step 2 - Enter your loan account detailsFill in the following details: New Loan NumberSanctioned AmountDate of BirthSecurity Codeand click on the Submit button. Step 3 - Enter your personal detailsEnter your email address, a username and password and click on submi…