Income tax is something that each salaried professional has to account for and this is something that has to be paid irrespective of one’s circumstances. According to experts, salaried professionals should make it a point to claim their benefits in the suitable manner while filing their taxes. In case of any queries raised by the tax authorities while analysing claims, they should immediately clarify the same with the requisite authority or advisor to get tax benefits while filing their deductions.
The house rent allowance (HRA) is a vital component of one’s salary and in case employees live in rented accommodation, this can be claimed for tax exemptions based on specific regulations. For FY2018-19, the Government has eliminated previously available exemptions for medical expenditure and transport allowances. These have now been substituted with a standard deduction up to Rs. 40, 000. This gives an extra tax benefit of Rs. 5, 800 for salaried professionals. Other tax saving channels include investments in LIC premiums, PPF, Sukanya Samriddhi Yojana, National Savings Certificate, investment in equity savings scheme, 5-year FDs with post office and banks, tuition fees for education of children and repayment of principal amount of housing loan under Section 80C up to Rs. 1, 50, 000.
One can also claim up to Rs. 50, 000 annually for those contributing to the NPS (National Pension System). Payment for medical or health insurance is also eligible for certain deductions. Up to Rs. 25, 000 can be claimed for medical insurance payments for oneself, dependent children and the spouse. A deduction of Rs. 50, 000 can be claimed for medical insurance that has been taken for parents of 60 years and above. There are deductions for those who have obtained education loans for pursuing higher studies as well. This can be claimed on the interest paid on the education loan for 8 taxation years. Under Section 24, interest repaid annually on home loans is also tax deductible up to Rs. 2 lakhs for self-occupied properties. In case of let-out properties, there is no such limit and deductions can be claimed for the whole interest amount that has been paid.
As per estimates, salaried professionals can claim total tax benefits up to Rs. 6, 15, 000/- which includes the standard deduction, loan interest deduction and deductions under Section 80C along with medical insurance premiums, interest on education loan up to Rs. 1 lakh and NPS contribution. As a result, taxes of roughly Rs. 1, 91, 880 can be saved (maximum) by a salaried professional this year.