Here’s how salaried employees can save on their taxable income
- From donations for charity to deductions on rent and investing in government schemes, there is a lot that a salaried employee can save on his taxable income.
- Under the
Income TaxAct, a salaried taxpayer can claim a standard deduction of ₹50,000.
- According to Section 80CCD(1B), taxpayers can also invest up to ₹50,000 in the government's National Pension Scheme (NPS) — which is the retirement corpus.
- Donations made to the charitable institutions both via cheque and cash can be claimed for deductions.
Under the Income Tax Act, a salaried taxpayer can claim a standard deduction of ₹50,000. In addition to this, a person can also benefit from his charitable donations, child’s education expenses, pension scheme and health insurance cover.
As per the Section 80C of the law, legal guardians and parents can directly benefit from their child’s educational expenses. Tuition fee is counted in the tax benefits that can be availed within an upper limit of ₹1.5 lakhs per annum. However, this also includes other investments like life insurance and provident funds.
They can also invest in central governments schemes. Taxpayers can invest up to ₹50,000 in the government's National Pension Scheme (NPS) — which is the retirement corpus fund and can be withdrawn at the age of 60.
Medical insurance is an important investment that offers an umbrella cover for family — dependent children and parents. Salaried employees can also pay a premium for medical insurance policy, under Section 80D.
In fact, medical expenditure on family can also come help claim tax deductions. Under the Section 80D of the Income Tax Act, expenditure amounting to ₹50,000 on health condition of parents — who fall in the senior citizen category — can be claimed as a tax rebate. That is applicable to people aged 60 years and above.
Donations made to the charitable institutions both via cheque and cash can be claimed for deductions. Under Section 80G of the Income Tax Act, if a donation is paid via cash, the maximum deduction can go up to ₹2,000. However, there is no bar on the deduction amount if the payment is done through cheque or digital payment methods.
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To save tax, use cheque and not cash while donating to charity
Here’s how you can claim medical expenditure incurred on family to save taxes