In What Ways Can One Save Income Tax In India? | AU Small Finance Bank
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What are Some Ways to Save Income Tax in India?

    Any income generated by individuals is liable for taxes, imposed by the Government. An income tax is a tax on an individual’s income or business that taxpayers are obligated to file annually. Taxes act as a source of revenue for the Government, which is in turn used for public welfare through infrastructure like- parks, public transport, roads, rails, and much more. Government jo bhi taxes collect karti hai, wo public services ko behtar banane mein lagati hai. Before knowing some ways to save income tax, let’s understand how income tax works in India.

    Income Tax in India

    According to the Constitution of India, Schedule VII under the Union List, the Centre has the power to levy taxes on any income (other than agricultural income). The government gets its biggest portion of revenue from income tax. As per budget 2019-20, there is no significant change in income tax slabs, which remain the same as they were for 2018-19. Generally, there are two categories of income tax slab rates:

    Individuals and the Hindu Undivided Families (HUF’s)

    • For male and Female Individuals below 60 years of age and HUF
    • For all senior citizens below 60 years of age
    • For all superior citizens above 80 years of age
    • Applicability of surcharge

    Businesses

    • Co-operative societies
    • Local authorities, Firms and Domestic companies
    • Education Cess and SHEC

    Saving Income Tax in India

    As a citizen of India, it is mandatory for every self-employed (aap ka khud ka business hai) or salaried person (ya aap kisi ke liye job karte hain) to pay income tax. Filing an annual ITR is compulsory, but there are some exemptions, so that you can save!

    1. If you have Rs 10,000/- in your savings account, you are free from paying taxes on the same (having up to 10,000 INR in a savings account is not taxable). If the income earned from interests in Rs 6000/- then you are only liable to pay taxes on 6000/-
    2. An educational scholarship is not taxable.
    3. National savings certificate are free from taxes in the year they are bought.
    4. As per Section 80C, deduction on life insurance policy can be claimed under the Income Tax Act of India.
    5. Any presents that you receive in the form of cash/cheque/gifts on the occasion of your wedding are absolutely tax-free.
    6. Any income which has a base source of agriculture is tax-free.
    7. Anything that you receive as ‘inheritance’ is tax-free. You are not liable to pay any taxes (for pushtaini jaydad).
    8. Under section 80E, Interest on education loan is also tax-free.
    9. Food expenses and travel/hotel expense can be saved from taxation if they are a business expense.
    10. As far as medical expenses are concerned, these are the exemptions:
      Persons Covered Exemption Limit
      Self and family Rs.25,000
      Self and family + parents Rs.(25,000 + 25,000) = Rs.50,000
      Self and family + senior citizen parents Rs.(25,000 + 50,000) = Rs.75,000
      Self (senior citizen) and family + senior citizen parents Rs.(50,000 + 50,000) = Rs.1,00,000

    Since you can receive these Income Tax exemptions, humein umeed hai ki ab aap ache nagrik ki tarah tax bharenge bhi or bachayenge bhi!


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