Shri Dixit is 48
years old. He works in
a private firm. His annual income is
rs. 7,00,000. How much tax will he have to pay?
Answers
Answer:
Your current tax liability will be Rs. 66950 (including 3% cess). However, you can reduce the tax liability by various investments.
Some of the basic and most common Tax saving investments are as follows :
Under Section 80C - upto Rs. 1,50,000 in total.
Life Insurance Premium - primarily this is for Life Insurance but there are several money back and growth policies which pay good returns on investment.
Public Provident Fund - One of the safest investment options with minimum risk. The interest rates are always higher than marker interest rates. However, there is a lock-in period of 15 years. However, one can avail loan against it from fourth year.
Fixed Deposits - Tax saver FDs pay more than FDs for shorter periods. Also, your funds are safe if the FDs are in nationalised banks. Look-in period of 5 years.
ELSS - Slightly riskier than other tax-saving investments because the returns vary on market conditions. Lock-in period is three years.Hope this helps.
Tuition Fees - Payment of School Fees of your kids will be liable for deduction.
Under section 80D, deduction of Rs. 25, 000 (Rs. 30,000 for senior citizens) will be available for medical insurance.
Under section 80CCD(1B), contribution of upto Rs. 50,000 is allowable as deduction in excess of limit of Rs. 1,50,000 under 80C.
If you have never invested in share market before, you can claim deduction for any investment upto Rs. 50,000 under section 80CCG. The deduction available is 50% of amount invested. Therefore, maximum deduction available is Rs. 25,000. However, there are several conditions in this like lock-in period.
If you live in a rented accommodation and get HRA, you can take benefit for HRA.
However, if you do not get any HRA, you can claim a deduction of upto Rs. 2,000 per month or rent paid whichever is higher.
If you have taken a housing loan, you can claim the interest paid on the same as a loss from house property.
Donations under section 80G carry tax benefits.
Hope this was helpful
Step-by-step explanation: