How to save income tax in India is a question asked by all tax payers. It means reducing the income tax amount a person pays while filing his tax returns. Income tax act section 139 states that it is mandatory for all individuals who earn above the prescribed maximum to pay tax and file for tax returns. At the same time the Indian Government also provided the act to allow several provisions to save tax that is payable.
Exemption on income can be as follows
Agriculture Income, Incomes on individuals doing research work in India, Interest earned by Non-resident (External) account, amount exchanged from foreign country, Gratuity to a maximum of RS.3.5 lakhs, Amount received towards voluntary retirement to a maximum of Rs.5.0 lakhs, Superannuation Fund, Special employee benefits and allowance received from employer, Educational scholarships, Income through University or any other educational institution, Income earned through a hospital or any other institution used specifically for Philanthropic purposes, Income earned through media having its head office in India for the purpose of advertising.
Income tax saving can be done through several way, according to section 88C of the Income tax act, any Indian women under the age of 65 can rebate Rs 5000 on the payable tax amount. The new section 80C of the Income tax ACT allows bigger tax allowances. Schemes eligible for benefits according to Section 80C are PPF(Public Provident Fund), ELSS (Equity linked saving scheme)– Mutual fund, NSC(National Savings Certificate), KVP(Kisan Vikas Patra), Life insurance, Senior citizen saving Scheme 2004, monthly income scheme, infrastructure Bonds, ULIP (United linked insurance Plans)and Post office time deposit account.
Some other benefits available are interest paid on Housing loan for self occupied property, medical insurance premium, expenditure on disabled dependant, expenses paid on medical treatment for self or a dependant, education loan interests and deductions for a disabled person and share of a partner in the total income of a company.
Tax deduction are available for investment in debentures, bonds, investments in financial institution, investments for industrial development of India, investments in co-operative societies and investment under national development scheme. Special Tax Deductions under the Section 80 RR can be availed by the Film Directors, Sport person, Authors and Musicians.
Mutual funds are fully exempt from income tax according to Section 10(33). Equity funds are exempt from dividend tax. You can get more information about income tax saving by the visiting the following web site. http://www.incometaxindia.gov.in/