As the deadline approaches for providing investment proof related to income tax for the financial year 2023-24, it’s essential for salaried individuals to plan effectively. Different offices may have varying deadlines, some considering January, while others February is the last date. Every taxpayer aims to minimize the tax burden legally.
To optimize tax savings, it’s advisable to work with your HR department to structure your salary in a tax-friendly manner. This can help in reducing the tax liability significantly. Key components to consider for investment include Housing Rent Allowance (HRA), Leave Travel Allowance (LTA), Health Insurance, and Life Insurance.
Here’s a Breakdown of How You Can Strategize Your Investments:
- Telephone bill – Rs 6,000.
- The 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.
- Deductions under Section 80C (LIC, PF, PPF, children’s tuition fees, etc.) – Rs 1.50 lakh.
- Contribution to National Pension Scheme (NPS) under Tier-1 as per Section 80CCD – Rs 50,000.
- Health insurance premium for self, spouse, and children under 80D – Rs 25,000.
- Additional rebate on health policy for parents (senior citizens) – Rs 50,000.
By availing of these deductions and exemptions, your taxable income can be reduced to Rs 4,96,500. If your taxable income falls below Rs 5 lakh, no tax is applicable as per current tax regulations. Following this approach can help you achieve zero tax liability on your income of Rs 12 lakh.
Also Read: Income Tax Update: Is It Possible to Save on Taxes Through Stock Market Investments?