The Finance Bite

Its that time of the year when most of us are reminded about savings to our incomes, that time when we’re made to realise that ELSS saving were infact better choices than dolling that money out on night-outs and (oh-that-sexy) expensive tablet you just bought. That time when your faces drown as you look at the tax computations bankroll the Income tax Babu’s Pockets.

TheFinanceBite- Personal taxes guide

Or quite simply, that time when our savings declarations are due to our employers for more/no tax deduction from our remaining existence on the planet.

Fret not, People! TheFinanceBite gives you a guide to save taxes that easy way.

To move forward, each must understand that there are atleast 2 simple ways to save taxes on salaries; the deductions and the exemptions

The exemptions: These are the incomes (allowances) that the government exempts upto a threshold limit.

eg: Make sure you have these before you compute your taxes and declare your incomes

Travel allowance: 800(for a normal healthy person) or 1,600(for a handicapped person, not esentially severely handicapped)

House Rent Allowance(the infamous HRA): The least of 3 is exempt- HRA component in the salary/rent paid-10%of basic salary/50%(40% if living in a non metropolitan city) of basic salary.

Medical Allowance: 15,000 a year (medical bills that support expenditure, exempt them to a max of 15,000 a year). This is typically different from the medical insurance policy you pay.

Children’s education allowance: Rs. 100 per child per month (that rounds off the Rs. 2,400 per annum)

The Deductions: These are based on actual evidences and the government’s way of showing appreciation for contributing to the economy’s health.

Your 80C falls here and so do your mediclaim policy payments.

We all have some bit of knowledge about the 80C way of saving taxes. We’ll let you know of some of the lesser known expenses you can put in under your 80c dclarations. read on:

Tuition fee: Your child’s tuition fees component is exempt under this section. (mind you, only tuition fee, no building/development/lab fund).
But Why this? Remember, its the government’s way of thanking you, because “Padhega-tabhi-to-badhega-India”

Bank Interest: Interest earned during the year upto Rs. 10,000 is exempt in a year under section 80C

Health Insurance: A deduction of up to Rs 15,000 can be claimed in respect of the health insurance premium covering you and your wife and dependent children. You can claim an additional exemption of Rs 15,000 on premium payments made for parents and a higher deduction of up to Rs 20,000 if one of your parents is a senior citizen. This is in addition to Rs. 1Lac 80C deduction.

Deduction for rent paid if you are not availing HRA: You can claim a deduction for rent paid to the extent of INR 2,000 per month even if your salary doesnot have a HRA component from your employer or you are self-employed. This deduction, available under Section 80GG, is subject to some conditions.

To more suggestions on your peculiar queries and burdening taxes, write to us at thefinancebite@gmail.com. We’ll rescue you from being the guy above to the dude here>. (Our services are free, we don’t need to remind you again)