Salary Hike in 2013 – How to Save Income Tax

If the financial year 2012-13 has bought happiness to you face in the form of salary hike by your employer, let’s keep that smile on your face by reducing your income tax liability on your increased salary amount. OR You might have made a switch over from one company to other and got an additional CTC Salary or Cost to Company. OR you might be working with IT company like Infosys or TCS and would get an TCS salary hike in 2013

Salary Hike and Saving Taxes

There are different ways to save income tax on your salary. Let have a look at the best tax saving options when you get salary increment

Section 80C Deductions

  • There are a lot of tax saving options, the prime one being Section 80c tax deductions where you can invest upto Rs 1,00,000 in ELSS mutual funds, Provident fund, home loan principal payment, stamp duty and registration charges for buying a home in the year of home purchase, National Savings Certificate (NSC)
  • Infact Life Insurance Premiums also come under tax deduction under Section 80C if the sum assured is atleast 10 times the annual premium. You might find that single premium policies may not be eligible for income tax benefit as they offer a lesser amount of life cover.

Section 80D Deductions

One other way to save income tax on salary in India is by claiming an additional deduction of Rs 15000 for paying premium against your own medical insurance policy and an additional Rs 20,000 for paying medical insurance premiums of your parents

Salary Structure Look

National Pension Scheme (NPS)

You can claim an additional tax deduction of 10% of your basic salary by investing the amount in National Pension Scheme (NPS) under Section 80CCD. So if your basic salary component out of total taxable income is Rs 4,00,000, it means you can claim a maximum tax deduction of Rs 40,000 under this section of Income Tax. In this case, you would be able to save tax of Rs 4120 considering 10.3% tax rate slabs including education cess. There are two types of NPS accounts and you can claim deduction only on Tier-1 NPS accounts

Tips to Increase Take Home Salary

Home Loan Interest Payment

If you are living in the house for which you are claiming a home loan interest payment deduction, you can get an additional tax deduction of a maximum of Rs 1.5 Lakhs under Section 24b. There is no restriction of the number of houses you own to claim Sec 24b tax deduction. You are not eligible to claim interest on home loan payment benefit in the year you pay EMI to the bank in case you have started paying pre-EMI to the bank for a under constructed house. But later on you can claim that claim amount as deduction in 5 equal instalments of five different financial years

1x1.trans

In the table given above, we can easily see the tax payer individual was able to save a tax liability of Rs 60,255 on an annual basis or around Rs 5000 monthly by claiming various tax deductions under Income Tax Act. Income Tax Planning is very important when you get any salary hike or you fall under high income tax bracket of 20% or 30%. You are also requested to start up with tax planning during the start of financial year rather than waiting for tax season of February and March every year i.e may be by starting up a mutual SIP at the start of financial year which help you to accumulate long term wealth when you get Infosys salary hike in 2013 or with any other company along with help you in saving income tax on your taxable income

Subscribe via Email

Comments

Leave a Reply

Your email address will not be published. Required fields are marked *