Most of the salary tax payers are always in search for income tax savings tips or a very general question from a salary tax payer is how can I save income tax. It is also true that there are not many tips to save income tax on salary. However , this quick post is on the subject of ways to minimize tax deduction on salary income .
4 Ways to Minimize Tax Deduction on Salary
You must be aware that the provident fund deduction or new pension scheme participation under which a percentage of your salary is deducted and equal amount of contribution is made by the employer are allowed deduction from taxable salary. Likewise , there are other investments like life insurance or investment in term deposits specially meant for tax savings , payment of principal amount of loan on home construction or purchase or claiming deduction for mediclaim policy on yourself and family members . In fact , you can see this chart of deduction u/s 80C to 80U
You must be aware that you get tow kinds of benefits or tax relief if you buy home by taking loan . The payment of principal amount of loan for construction of house can be deducted under section 80C , subject to maximum RS 1 lakh . You must be aware that the deduction is available only if it is paid to an institution.
The interest upto Rs 1,50,000 is also claimable on interest payment on home loan under section 24 of the Income Tax Act. This is the only loss which is allowed to be adjusted with the income from salary .
So , it is in your interest that you inform your Drawing & Disbursing Officer about the interest and principal payment by submitting the information and evidence of interest payment or due on account of home loan.
You are advised to read how to report loss from house property to your DDO.
This maximum marginal tax relief of Rs 2000 is allowed only if the total income is 5 Lakhs or less. When you are submitting the income statement , claim before the DDO that relief , if you are eligible . You can read Don’t Forget to Claim Marginal Relief u/s 87A
There is provision for paying advance tax on income . So, the income tax law desires that tax , if required to be paid in advance , should be paid. Whatever is left , should be paid as self assessment tax .So , if you have other income , you can wait upto March or even upto date of filing of return , by which you should pay the tax (including any interest
While the aforesaid points can not save tax , it can prevent excess tax deduction on salary