Learn how to save tax in India. What is section 80C, 80D, and 80E. Must for salaried people

 Income tax. Whenever we discuss tax, people generally think that how complicated the topic will be. Because when the year is on the brink of end and this is often the most effective topic to grasp. Everything about revenue enhancement that if you're searching for investment. Want to save lots of your taxation by doing so, what will be the ways to try to so. Further we are going to discuss the difference between the old tax regime and also the new tax regime. As you continue to have time left within which you'll be able to save tax on your investments.

Friends, within the budget of 2020, the minister of finance of India brought a brand new legal system, whose purpose was to simplify the legal system. But one important thing that you just should know is that each one the deductions and exemptions were available within the old tax under the new legal system. The regime won't be available under the new tax regime, but a bonus under the new regime is that the tax under the tax slab has been reduced. So allow us to first try and understand this question, what's the difference between the old legal system and also the new legal system. To grasp the difference allow us to compare the taxation slabs under both the regimes.

Three things are tax slabs, old tax rates and new tax rates.

So if we speak about 0 - 2.5L, then under both the arrangements you wish not pay any tax,

From 2.5L to 5L you have got to pay 5% tax under both the arrangements

From 5L to 7.5L you had to pay 20% tax but under the new tax rates you may need to pay only 10% tax

7.5 L - 10 L, 20% and 15% ie 5% off here too

10L -12.5L 30% and 20%, which suggests you'll be able to see a tenth discount within the new tax regime from the old tax regime.

12.5L-15L You had to pay 30% under the old charge per unit as compared to 25% under the new charge per unit.

And the charge per unit of 15 lakhs and above remains same under both the regimes i.e. @ 30%

So it absolutely was about the tax slab rates under both the regimes but if your income is above 15 lakhs then you get differing types of deductions and exemptions. Under the old regime which implies that if you are doing any expenditure or any kind If you invest, you are doing not need to pay anything. Taxes on such income, so you've got to decide on which one is best suited to you. But before that permit us discuss deductions and exemptions, what they're, what percentage types exist and the way much tax you'll be able to save.

But first we've got to know the difference between the 2, as people consider them to be the identical. To elucidate the difference between the 2, let me take an easy example. Suppose there's someone A whose income is Rs 1 lakh on which he should pay tax in hypothetical situation. Therefore the income is 1 lakh under which there are various sources of income like HRA etc. Now suppose an element of 20000 out of 1 lakh isn't taxable and his taxable income under 80000 is now 80000, the government has provided some provisions in respect of which if he invests in step with them, his more taxable Income is reduced.

Now suppose if he invests 10,000 out of 80,000, then his taxable income is reduced to about 70,000 as deduction as per the provisions. There are some provisions which are promoted in order that people can save and be able to invest. As 20000 was an exemption, investment of 10000 out of 80,000 is his deduction which implies that kind of investment from his taxable income where he doesn't need to pay any tax.

So that was the concept of deductions and exemptions, allow us to now understand what's involved to create it easier to know

There are different titles of deductions and exemptions that individuals like. If we discuss exemption, then an income under your income on which you are doing not must pay tax if you submit your proof. So if you take a look at your total income, HRA, Leave allowance are the incomes on which you'll be able to get tax benefits on submission of proof of income. Mobile, Internet Reimbursement, Food Coupons, Car on Company Lease, Standard Deduction to callsome. There are incomes on which you'll be able to benefit of the exemption

Now if you invest in PPF, ELSS, Employees Provident Fund, LIC then you'll avail deductions on these. But if we discuss these deductions, they're limited to a specific limit which I’m talking about. Let me tell you thoroughly, now that you just have understood about Deductions and Exemptions. Before going into detail I will be able to attend my first question that a lot of people have doubts about old tax regime and new tax regime. So for that you simply will must do some calculations that if we remove the deductions and exemptions from the old tax regime, will I’ve got to pay less tax than within the new regime.

If you have got to pay less tax there then old tax regime is healthier for you otherwise new tax regime is suitable. So one word answer are often no and varies from person to person where you would like to try to some calculations it occurs .

Friends, now we'll go to the deduction and capping and ceiling under that, so if you have got opted for the old tax regime and you continue to have time to speculate after which you'll get tax benefits.

First and foremost is that the 80C deduction, if you're a salaried employee then you want to have heard about it otherwise we are going to tell you. Now suppose if I take exemption, then your taxable income is 10 lacs and you invest 1.5 lacs which are roofed under 80C, so you do not must pay tax on it 1.5 lacs. Hence the deduction under 80C is capped at 1.5. Lakh means the means which I’m visiting tell you. If you invest total 1.5 lakhs in them then it means maybe you not ought to pay any taxation on those 1.5 lakhs. Here you ought to not get confused that you just can invest 1.5 lakhs in every instrument. And save all tax, regardless of the instrument is under 80C, the entire investment cap is 1.5 lakhs. What are the choices available now under 80C

If we discuss your PF then you'll see your provident fund contribution. But the contribution made by you is calculated under 80C. Second and most significant is ELSS, an open-end investment company where you invest in ELSS Mutual funds named ELSS are equity-linked savings schemes. If you invest in them today, you can't withdraw your money within the next 3 years. So if you invest 1.5 lakhs in ELSS, you are not paying tax under 80C. And you'll not be ready to withdraw it for 3 years, but whatever return you earn on mutual funds is yours only. So here you get 2 benefits, tax deduction in addition as return on investment

After this you'll see tuition fees of two children, insurance for self , spouse, unit-linked insurance plans called ULIPs, except for this National Savings Certificate and 5 years fixed deposit. If you're in bank If you are doing FD for five years, you'll be able to make the most of 80C. From here you need to have understood that assuming tuition fee of 20000 of kids under 80C you've got invested in investment firm of 50000, then total 70000, your PF contribution is 30000, total 1 lakh, and rest 50000 used for one it's known that on FD of 5 years, there's a complete exemption of 1.5 lakhs under 80C

The second and most vital part is of National Pension Scheme NPS, under 80C. You'll invest 1.5 lakhs, but you'll invest additional 50000 in NPS, on which you'll avail deduction, i.e. it is 1.5 Lakh is above. So you'll research NPS, however we are going to try and make a separate video on NPS in order that we will tell you about the scheme and its benefits.

After 80C we'll move to 80D where insurance is promoted, the govt. took different initiatives. Because you furthermore might know the importance of insurance, therefore the premium got it comes as a deduction under 80D. Maybe you pay a premium of 15 to twenty thousand. you'll claim it as a write-off under 80D

Next is 80E, suppose you have got taken loan for teaching. And thus the interest earned on that becomes tax-free, then you'll be able to claim interest under 80E as deduction.

There is another provision within the variety of friends 80DD. Suppose someone relies on you who is disabled and if you utilize any money on their treatment, then you get write-down thereon. As an example the person is 40% disabled then you get a deduction of 75000, their treatment and if the incapacity is 80% then this amount goes up to 1.25 lakhs.

About LTA (Leave Travel Allowance) which is exempted from taxation from your salary. But you've got to submit proof to say deduction, if we see HRA you'll get exemption, coupon for food. The amount received various forms of documents should be submitted for creating a claim. From gratuity, car on company lease which could be a service provided by various companies whose benefits also are covered under exemption. It includes telephone and internet expenses, then friends these are the items on which you'll get a reduction. But you'll be able to get revenue enhancement benefits.

So friends, in spite of everything  we understand that taxation is extremely important. And as a responsible person, you've got to pay your revenue enhancement. But the government has provided different provisions in order that you'll be able to invest. And as a responsible citizen, you must also use these provisions. As you furthermore may get the good thing about paying less taxation. So overall there's some investment and a few expenditure to avoid wasting tax. If you report these expenses correctly and produce supporting proof, you get tax exemption on them. And if you invest in provisions under 80C and 80E together with supporting documents, you'll be able to avail taxation deduction . If you invest now you'll be able to get deduction under 80C

So friends, concentrate to those aspects quickly and keep these items in mind while earning!!