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Tax planning for salaried employees is essential because it varies with increasing income. Here are some tax-saving options for salaried employees. Read on to know more about it.
As you start working and earning beyond a salary slab of Rs. 2.5 lakhs per annum, you must pay what is known as income tax. Tax planning for salaried employees is essential because it varies with increasing income. To facilitate the planning process, various sections under the Income Tax Act, 1961 provide opportunities for tax saving for the salaried. These provisions empower you to enjoy the income tax exemption for salaried employees.
The best financial planning for salaried persons should always include the benefits reaped on taxes they pay. However, every section has an income tax limit for salaried people. Some of these tax-saving options include:
Section 80C of the Income Tax Act
Section 80C puts the income tax limit for salaried persons at Rs. 1,50,000. Under this section, income tax exemption for salaried employees comes in the form of:
Under this, the income tax limit for salaried person is Rs. 1.5 lakhs combined with section 80C, which means that the total exemption you can avail should not exceed Rs. 1.5 lakhs. The income tax exemption for salaried employees is on the annuity that is paid on any pension plan.
Here the income tax exemption for salaried employees is on the premium paid for any health insurance plans or any additional health riders that may have been bought on the term insurance plans. And the limit is Rs. 25,000 for self, spouse, and children and Rs. 50,000 for parents above the age of 60. Apart from this, one can claim income tax exemption on House Rent Allowance, which is for those living in rented spaces; here, the rent slips must be shown to claim any deductions.
It is important to look at tax saving options for salaried employees to get the most of your income. Tax saving is the best financial planning for salaried persons and can be done by anyone paying income tax. One must, thus, explore all their options before coming to a decision and make the best of it.