Tax Saving

Tax planning is an act of using the several benefits given under the laws by the government to reduce the tax burden. These methods are completely legal. There are different types of benefits given under the laws. We have tried to enumerate them according to their types.

Taxable value of perquisites
a) Find out taxable value of perquisite assuming accommodation to be provided to the employee is unfurnished
b) Add: 10% of original cost of furniture and fixtures (if these are owned by the employer) or actual higher charges paid or payable (if these are taken on rent by the employer).

Individuals(Other than senior and super senior citizen) = Up to Rs. 2,50,000
Senior Citizen (who is 60 years or more at any time during the previous year) = Up to Rs. 3,00,000
Super Senior Citizen (who is 80 years or more at any time during the previous year) = Up to Rs. 5,00,000

Deductions for investments made under Chapter VI A

Marginal relief is available from surcharge in following manner

a) in case where net income exceeds Rs. 50 lakh but doesn’t exceed Rs. 1 Crore, the amount payable as income tax and surcharge shall not exceed the total amount payable as income tax on total income of Rs 50 Lakh by more than the amount of income that exceeds Rs 50 Lakhs

Salary
Basic salary
Taxable allownace
Non Taxable Allowances
Value of perquisites taxable
Less: Standard Deduction
Less: Entertainment Allowance
Less: Professional Tax

Components of salary: Fully Taxable
Basic salary
Dearness Allowance (referred to as ‘DA’)
Bonus, fees or commission

Standard Deduction : Rs. 50,000 or the amount of salary, whichever is lower

Tax rebate in case of individual resident in India, whose total income does not exceed Rs. 5,00,000 quantum of rebate shall be an amount equal to hundred per cent of such income-tax or an amount of Rs. 12,500, whichever is less.