People running business firms should know how they can save tax that needs to be paid even on the earnings of 10 lakhs. Apart from the fact that taxes are considered a financial burden, a lack of proper knowledge of tax planning could be an add on to the stress.
What is an income tax?
According to the income tax act, of 1961, Income tax is a tax that
the central government levies on the incomes of its citizens. The government has the right to change these income slabs and tax rates every year in its union budget.
The income of an individual not only includes salary but income from house property, gains from the profession, profits from business, capital gains income, and income from other sources.
Income tax return (ITR)
The income tax return is a form based on which a person’s income is calculated. It is a statement that is used to show the status of a person, their sources of revenue, net tax liability, and claiming of tax deductions.
It is mandatory and compulsory for every individual who earns a certain amount of money to file this form. Firms or companies, self-employed or salaried individuals, and Hindu undivided families (HUF) must file ITR to the income tax department of India.
And if you are thinking of paying tax on income of 10 lakh rupees then here are some ways, how you can manage yourself from not paying even Rs .1.
- Start investing in such following Tax saving plans to save more as they offer tax deductions under sec 80 C or 80CCC tax :
- Employee provident fund(EPF)
- Senior citizen saving scheme
- Public provident fund(PPF)
- Equity-linked saving scheme(ELSS)-tax exemption up to a maximum limit of Rs 1.5 lakh
- Sukanya samriddhi account
- Tax saving fixed deposit
- National saving certificate(NSC)
- National pension scheme-tax exemption up to 1.5 lakh
- Bank FD’s
- Home loan plans
You can claim a deduction of up to 2 lakh on repayment of the principal amount under section 80 C for an existing home loan. you can save a huge amount on the repayment of the principal as well as on a home loan.
- Donation and clarity
Under the section 80G of Income tax, a Donation of 25 thousand rupees to any organisation or trust working on developmental activities can bring your taxable income to 5 lakh. Tax exemption to donations under this act provides incentives for the public to give the organisations that work towards the welfare of society.
- Educational loan for tax deduction
Under section 80 E of the Income Tax Act, 1961 provides a taxpayer with a facility of claiming deduction on an educational loan . you can claim a deduction of interest paid on an education loan for higher studies. This deduction can be availed only for eight years and only under the name of the taxpayer or the spouse or the children of the taxpayer.
- Health insurance policy
Opting for a health policy has become important or we can say necessity with rising health medical costs and declining health quality of people. These insurance policies help individuals in terms of financial strain at the time of health emergencies.
6. Wedding Gift:
Under Section 56(2), gifts received at weddings are non-taxable. A wedding is an occasion for the entire family, and especially for the individual who is getting married. It is a humongous event where the bride and groom are showered with gifts. Such gifts can be from your relatives or friends.
Be it a gift, cash, or a cheque, gifts received on getting married are exempted from tax.