How to save tax without fresh investments in FY 2019-20

For Indian taxpayers, March is a critical period to ensure that taxes are payable and also to verify that investments, if necessary, are tax savings achieved. Because any delay or deficiency in tax payment will lead to taxation by paying the tax at a later time. Failure to take advantage of eligible discounts (Sections 80C, 80D, etc.) will result in the payment of taxes, which may have been provided, to the government.

In some cases, the taxpayer may have liquidity problems and, as such, is not in a position to make more investments in tax savings tools. These taxpayers do not need to be frustrated because they can claim some expenses that they may have incurred and are also eligible for the tax deduction when calculating the tax owed by the government. In this context, these are eligible for the tax exemption below.

  1. Children's education and hostel allowance and tuition fees: Section 10(14) and Section 80C

Any special allowance for children's education is allowed in addition to shelter costs (generally called child education subsidy and housing subsidy) granted by the employer by the employer as an exemption pursuant to Article 10 (14) of the Law on Income Tax. , 1961. The education grant exemption for spending on youth and youth shelters is limited to Rs 100 per month and Rs 300 per month, respectively, for up to two children.

Income Tax slabs

Article 80c of the law also stipulates that the tuition fees paid to any university, college, school, or other educational institution located in India for the purpose of full-time education for either of the two employed children are eligible for the deduction. Any individual taxpayer (both paid and unordered) can take advantage of this discount if the tuition fees described above are paid to their children. However, the amount allowed as tuition does not include payment in the form of development fees, donation fees, fees, or payments of a similar nature. Also, the discount is not available if paid to a foreign educational institution.

It should be noted that the children's education subsidy differs from school fees. The children's education grant is available as a discount only if it is part of the salary component and the taxpayer has already incurred expenses to educate their children. The amount of deductible deductions is Rs 100 per month for each child, up to two children. However, in the case of tuition fees, it is allowed on the basis of actual expenses incurred for the education of children up to a maximum of Rs 1.5 in Section 80c, although this may not be part of the taxpayer's wage component.

  1. Leave Travel Allowance: Section 10(5)

Family vacations or planned travel destinations are becoming more frequent. Article 10 (5) of the law grants a discount on the travel authorization permit based on the presentation of proof of travel and related expenses, which are also subject to certain conditions. This discount can only be used in connection with a maximum of two trips within India in a four-calendar year block. The current block is now 2018-21, which the taxpayer must be aware of. Remember that you must present proof to your employer by March 31, 2020, to be eligible to claim this discount for the 2019-2020 fiscal year.

If no proof of travel expenses is presented to your employer, you will not be able to claim an exemption at the time you file your tax return (ITR).

  1. Deduction in respect of interest on loan taken for residential house property: (Section 80C, Section 80EE and Section 80EEA)

With the increase in the cost of real estate, many people are choosing mortgage loans to buy property on their behalf. A special allowance has been assigned for some first-time homebuyers since the equal monthly installment (EMI) interest component can be claimed for a loan as a discount. 

Pursuant to Section 80EE of the law, an individual taxpayer is allowed a discount of up to Rs 50,000 in interest paid on a loan taken from a financial institution, approved during the period between April 1, 2016, and 31 March 2017 (the loan amount does not exceed Rs 35) for the purchase of an apartment building no. Its value exceeds Rs 50,000.

Also, any taxpayer who is not eligible to claim benefits under section 80EE of the law can choose to claim this benefit under section 80EEA where the individual taxpayer can pay a discount of up to 1.5 rupees as interest on the loan taken from a financial institution, Approved In them from April 1, 2019, to March 31, 2020, to purchase an apartment building of no more than Rs.45,000.

It should be noted that the above discounts will not be available to the taxpayer if they own any other residential property on the loan approval date. In addition, the main component of the payment can be used as a discount under section 80C of the law and allow interest as a discount of up to Rs 2 Lakh in the case of self-ownership.

  1. Deduction under section 80CCD(2): Employer's contribution to NPS

The deduction from which each employee must benefit is the contribution made by the employer under Section 80CCD (2) to the reported pension system that is not covered in the total maximum of Rs 1.5 lakh for the cumulative deduction under Sections 80C, 80CCC, and 80CCD (1). 

Income Tax slabs

Under Section 80CCD (2), employees can get a discount on their employer's contribution to their NPS account with a maximum of 10 percent of their salary. For this purpose, the salary includes a disability allowance, if the working conditions stipulate it, but excludes all other allowances and benefits.

The discount is added under Section 80CCD (2) of the Act, in addition to the cumulative discount available under Section 80C, with a total limit of Rs 1.5 lakh and 80 CCD (1B) which is Rs 50,000.

  1. House Rent Allowance: Section 10(13A)

The rental housing allowance (HRA) is part of the salary in most cases. Many employees who do not own residential properties or move out of their residential properties can take advantage of an HRA discount based on the actual rent they pay. With respect to human rights, article 10 (13a) of the law establishes a minor exemption from the following amounts:

(I) 40 percent / 50 percent (in the case of metropolitan cities) of the salary amount;

(2) The actual amount received as HRA;

(Iii) A lease amount exceeding 10 percent of salary

The employee/taxpayer shall provide the necessary rent receipts / rental agreements and other details to the employer to allow him to calculate the amount of the exemption. Even if the rent receipts are not provided to the employer, you can claim the tax benefits on the rent paid at the time the ITR is filed.

  1. Employees' Provident Fund (EPF)

EPF is one of the mandatory deductions from the salary of most employees and as such should be taken into account when calculating eligible tax deductions. The employee contribution to the recognized savings fund, which is deducted from their monthly salary, is allowed as a discount below the total limit of Rs 1.5 lakh under section 80c. Deduction under Section 80c is not allowed in connection with any employee's contribution to an unrecognized savings fund.

  1. Standard deduction on Salary

Another mandatory discount is the standard discount of Rs 50,000 for all paid employees. The employer considers this deduction while calculating the tax obligations of each employee. This discount is available at the time of sending the ITR. However, when planning your taxes for the 2019-2020 tax year, you should also consider a standard deduction to calculate your total tax obligations.

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