With the financial year 2022 coming to close, it is that time of the year again when you have to review your tax payments and prepare to file them. Along with your tax payments, it is also crucial to review all your investments and gauge whether you are maximizing your tax-savings from your investments.
After all, if you invest wisely, you can save quite a substantial amount on your tax payments!
Here, we will discuss all the income tax slabs in India and various ways through which you can save on your income tax. But before we begin, let us look at your income tax liabilities for the FY 2019-20.
Income Tax Slab for Salaried Individuals (Below 60 Years of Age) for FY 2019-20
| Income tax slabs | Applicable taxation rates for salaried individuals |
| For income up to Rs. 2.5 Lakh | Nil |
| For income ranging between Rs. 2,50,001 and Rs. 5 Lakh | 5% of the total income above Rs. 2.5 Lakh |
| For income ranging between Rs. 5,00,001 and Rs. 10 Lakh | Rs. 12,500 + 20% of the total income above Rs. 5 Lakh |
| For income above Rs. 10 Lakh | Rs. 1,12,500 + 30% of the total income above Rs. 10 Lakh |
Apart from these applicable rates, individuals under these tax slabs are also levied with an additional 4% health and education cess on their income tax payable.
Further, those with income above Rs. 50 Lakh are also levied with an additional surcharge, starting with 10% of their income tax amount and ranging up to 37% of the tax amount.
Now, if you earn above Rs. 2.5 Lakh per year, you will be liable for taxation according to the applicable tax rates.
But, hold on!
You can also save on your tax payments through the provisions put forth under Section 80 of the Income Tax Act, 1961.
Have a look!
Through Tax-Saving Investment Options Under Section 80C
Section 80C of the ITA offers several tax saving investment options, which you can choose to invest in according to your preference and risk appetite. These are –
| Investment option | Lock-in period | Expected returns |
| Equity Linked Savings Scheme (tax-saving mutual funds) | 3 years | 15%-18% |
| Unit Linked Insurance Plans (ULIP) | 5 years | Varies according to plans |
| National Pension Scheme | Till the investor retires | 12%-14% |
| Public Provident Fund | 15 years | 7%-8% |
| National Savings Certificate | 5 years | 7%-8% |
| Sukanya Samriddhi Yojana | Till the girl child reaches 21 years of age | 8.5% |
| Tax saving fixed deposits | 5 years | 6%-7% |
| Premium payment for life insurance policies | At least 2 years | Varies according to plans |
With these investment options, you can save up to Rs. 1.5 Lakh + 50,000 on your tax payments under Section 80C of the ITA.
Premium Paid Towards Health Insurance Policies
The provision of this tax-saving option is put forth under Section 80D of the ITA. Under this Section, you can avail the following exemptions on your taxable income –
| Eligibility | Exemption Limit |
| Health insurance for self and family members (spouse and dependent children) | Rs. 25,000 |
| For self and family + parents | Rs. (25,000 + 25,000) = Rs. 50,000 |
| For self and family (where the eldest family member is below 60 years of age) + Parents above 60 years of age | Rs. (25,000 + 50,000) = Rs. 75,000 |
| For self and family (where eldest member is above 60 years of age) + Parents are above 60 years of age | Rs. (50,000 + 50,000) = Rs. 1,00,000 |
You can also avail a tax waiver on cost amounting up to Rs. 5,000 spent on health-check-up expenses. This exemption is included in the Rs. 25,000 rebate is applicable to your health insurance policy.
Invest in Real Estate – Purchase a House!
When you avail a home loan to purchase a house, you can avail tax benefits under the following two sections –
- Total income spent on repayment of the principal amount borrowed under the home loan is eligible for deductions of up to Rs. 1.5 Lakh under Section 80C.
- A deduction of up to Rs. 2 Lakh on home loan interest, available under Section 24(b) of the ITA.
- If you are a first-time home buyer, you can also claim an additional tax exemption amounting to Rs. 1.5 Lakh on the interest payment of your home loan EMI under Section 80 EEA, over and above Section 24(b).
Other Options
Even though these are not investment options, you can avail tax benefits for the following –
- Section 80TTA – up to Rs. 10,000 on the interest income from bank investments.
- Section 10(10D) – entire sum assured amount under Life Insurance plans.
- Section 80G, 80GGA and 80GGC – for donations towards charities, scientific research and rural development, political parties, etc.
.. and more!
So, if you are looking to save tax payments in India, make sure you look through the available options and choose the ones best suited to your requirements!
Hello Ajeet, It’s a very nice thought to write an article for this topic. very informative article for all health insurance companies. Keep sharing.