The proposals for the budget 2022 have been laid down on the table in the parliament and going by the same it seems that a lot is on offer for the common man of the country. It is quite evident from the said proposals that an individual with an income of up to Rs.7.75 lakhs can now invest in a lot of different avenues that can save them from paying tax and can reduce the taxable income from Rs.7.75 lakhs to Rs.5 lakhs only.
This would mean that such an individual would not have to pay tax for the year 2022 and would end up saving an amount of Rs.15080 as compared to the previous year.
For example, let’s assume that your annual income is Rs.7.75 lakhs for the year 2022. Now you can claim a standard deduction of Rs.50000 for the year 2022 and then you can make investments under the various sections and save on your tax. As per the Income Tax Act an individual can claim a lot of Tax deductions and exemptions under the various sections.
There are a lot different sections that provide tax saving avenues and these are:
As per the proposals the maximum tax exemption limit under 80C has been retained at Rs.1.5 lakhs and the various avenues that are available under this section are Public Provident Fund, Employees Provident Fund, Five Year Bank or Post Office deposits, Kid’s Tuition Fees, Post Office Senior Citizen Scheme, Principal Repayment of Home Loan and National Pension Scheme.
The maximum available tax exemption limit under this section is Rs.1.5 lakhs. A contribution to an annuity plan of a Life Insurance Corporation policy for receiving pension is considered for tax benefits under this section.
To claim tax benefits under this section employees can contribute to the pension schemes notified by the government of India. The contributions are limited to a certain percentage of the gross salary.
As per the proposals, the government of India has laid down changes as far as Medical Treatment and Health Insurance is concerned. Under this section there are a lot of tax benefits for senior citizens and those who spend a lot on their medical treatments.
An individual can claim upto Rs.75000 for the medical treatments of parents, spouse or kids who have disability upto 40% and a tax saving of upto Rs.1.25 lakhs in case of severe disability.
A person who is less than 60 years old can claim tax benefits of upto Rs. 40,000 for the treatment of certain ailments and the same can be claimed on behalf of dependants also. Under this section, the tax exemption limit for Senior Citizens has now been revised to Rs. 1 lakhs. However, in order to claim Tax deductions under this section it is important that an individual obtains a Doctor’s Certificate or a Prescription.
In case an individual takes a loan for higher education, the said individual can claim tax deduction under the current section for the interest that is paid towards the said education loan. It is important that this loan should be taken for higher education for self or dependents like spouse or children. However, there is no limit on the amount of interest that can be claimed as deduction under this section and the said deduction is available for a maximum time period of 8 years or till the time that the interest is paid.
For home buyers that are buying a home for the first time by getting a home loan, they can claim an additional Tax deduction of up to Rs 50,000 on the payments of home loan interest under this section. However, in order to claim the said deduction a certain criteria has to be met.
- The sanctioning of the home loan should have been during FY 2016-17.
- The amount of Loan should not be more than Rs 35 Lakh.
- The value of the house purchased should not be more than Rs 50 Lakh.
- The person who buys the home should not have any other residential house in his name.
If an individual is eligible then exemption of Rs. 50,000/- for interest on home loan under section 80EE from assessment year beginning from 1st April 2017 and subsequent years can be claimed.
If an individual makes a contribution to a certain relief fund or a charitable institutions, he or she can claim deduction under this Section of the Income Tax Act. Deduction under this section can only be claimed when the same has been made through a cheque, a draft or cash and contributions such as food material, clothes, medicines etc. do not qualify for deduction under the current section.
These are the tax saving tips that you can look into in order to save yourself from paying large amount of tax and claim exemptions. Make sure that the tax planning is done well in advance and not on the last moment. Making the right investments at the right time is crucial and this is how one can save on their taxes.