Tax-Saving Options for Salaried Individuals in India- Part 2

As we have learnt in the previous Chapter that, tax planning is a major factor for the salaried class in India; this helps them reduce not just the taxable amount but also makes more prudent decisions towards investing your income, hence contributing to the wealth accumulation process. Starting from saving investment instruments to claiming a deduction against various types of expenditure, there are quite a few provisions provided by the government aimed at reducing the income considered for taxation. Now let's see how the following strategies can help the salaried to pay reduced tax and plan their post-retirement finances for the betterment of a secure financial future:

One of those is Section 80TTA, offering a deduction for interest on savings accounts with banks, post offices, and co-operative societies. The amount that can be deducted is ₹10,000 annually. This is applicable to those below 60 years. However, there is a more beneficial provision under Section 80TTB for senior citizens where the interest received from savings account deposits, fixed deposits, and post office deposits is allowed as a deduction up to ₹50,000. This helps retired people who have to meet their day-to-day living expenses with the help of interest income.

Other available options of tax-saving are Standard deduction introduced in the financial year 2018-19: this provision would offer a standard deduction for ₹50,000 over gross salary for all salaried employees. It also deducts the taxable amount with complete auto deductiveness. The best point to be noted is no additional documentation is required; therefore, it's solely left as an easy and swift facility upon employees.

Apart from these, several other provisions exist that further reduce your tax liability. For example, if you have taken an education loan for higher studies, the interest paid on it is allowed as a deduction under Section 80E. Unlike other deductions, no cap exists on the amount of interest that can be claimed. The only catch is that the benefit can be claimed for a maximum of only eight years, making this an excellent long-term savings.

Other than that, making a donation to a charity can help one save on taxes. Section 80G allows one to claim deductions against the donations made to specific kinds of charitable organizations. According to the nature of that organization, either 50% or 100% of the amount donated can be claimed as a deduction, thereby further reducing one's taxable income.

Conclusion

Tax-saving strategies are an indispensable tool for salaried people in India, not only for saving on taxes but also for maximizing savings. By utilizing these deductions, such as under Section 80C, 80D, and HRA, one can reduce his or her tax liability significantly and create a financially secure future.

The next chapter looks at how freelancers and small business owners can optimize their tax strategies, claim deductions, and ensure compliance to minimize taxes and grow their ventures. In the next issue, stay tuned for more tips on how to manage taxes effectively as an independent professional.