Tax Planning -Exemptions for Salaried Employees | Taxes

Finance | Taxes | * Written by petricam | Wednesday, 01 August 2012 02:04 | Word Count: 888

Every citizen is morally and legally bound to pay tax be it sales tax, payroll tax, income tax, capital gains tax, property tax, wealth tax, inheritance tax, so on and so forth. This is because the taxes that people pay to the government are ultimately used to improve public infrastructure. Though every person who pays taxes is aware of this, still seeing the hard-earned money going to the government is something that most people find hard to digest. That is why government has exempted certain investments from taxes so that not only would it provide the taxpayers the satisfaction of putting their money to good use but also would provide the government with money to carry out various social welfare activities. Therefore, before filing an individual tax return or business tax return , it is necessary to do tax planning.

Tax planning is not about evading taxes but avoiding taxes. It is about making the utmost use of the provisions available in Tax Laws to minimize it. Let?s look at some of the significant tax exemptions for salaried employees available as per Indian Tax Laws.

Section 80C

Under this section, taxpayers can claim a maximum of Rs. 1 lakh provided it is invested in any or all of the following:

* Employee Provident Fund (EPF) and Public Provident Fund (PPF)

* Premiums paid towards Life insurance (term insurance as well as endowment plans)

* Pension plans

* Equity-linked savings schemes (ELSS) of mutual funds having a lock-in period of 3 years

* Specified government infrastructure bonds

By investing in specified long-term infrastructure bonds, taxpayers can claim a tax deduction up to Rs 20,000. This tax exemption for infrastructure bonds is in addition to Section 80C.

* Principal paid towards Housing Loan

Under section 80C, principal repayment attracts a deduction up to ?Rs. 1 lakh while for interest payment tax deduction of Rs. 1.5 lakhs

* National Savings Certificates (NSC) and interest accruals on previous years' NSCs

Section 80D

Section 80D covers the tax deductions with regard to health insurance policies. As part of this, taxpayers can claim deduction of Rs. 15000 to Rs. 35,000.

Section 80DD

As per this law, any taxpayer or a member of HUF having a dependent relative suffering from any permanent physical disability or mental retardation can claim an amount of Rs 20,000 to Rs. 40,000. Section 80DD covers payments made to LIC?s ?Jeevan Aadhar? and UTI?s ?Special Plan for the Handicapped?.

Other Deductions

Salaried employees can avail tax deductions for Leave Travel Allowance (LTA), House Rent Allowance (HRA), conveyance, education, telephone, petrol and vehicle maintenance if the employer allows.

Read Also On: tax planning , Foreign Bank Account

?

Article Source: Article Directory - http://www.freearticleforyou.com

11

Additional Information on Author

Author of this article: petricam.

petricam joined FAFY - Free Article For You on Wednesday, 01 February 2012.

Additional Articles

Re-Publish: Tax Planning -Exemptions for Salaried Employees

You have permission to re-publish this article electronically or in print, as long as you are able to follow the Publishers Guidelines.

Source: http://www.freearticleforyou.com/Finance/Taxes/tax-planning-exemptions-for-salaried-employees.html

howard stern free shipping day free shipping day golden globe nominations 2012 war in iraq war in iraq government shutdown