In Budget 2020 has introduced a New Tax System
New and Old Tax Regime U/s 115 BAC and also allow the taxpayers to opt-in
whether they can get the New Tax Regime or Old Tax Regime U/s 115 BAC for the
F.Y.2020-21. Those who willing to opt-in the Old Tax Regime they can get the benefits
of Tax Sections and those who willing to opt-in the New Tax Regime they can not get
any Tax Benefits as per the Income Tax Act 1961. In this article 6 top tax
benefits for the Old Tax Regime for F.Y.2020-21
1. Use HRA Exemption Effectively
HRA (House Rent Allowance), an allowance given with the salary
to the government and private employees. This allowance is to meet the
expenditure actually incurred on payment of rent. Income Tax Department gives
tax benefit on this allowance. It Does not consider the full amount as taxable
income.
To avail the utmost tax break on HRA, you ought to keep your HRA
50% of the essential salary and rent paid should be 20% quite of HRA.
2. Purchase a Dream Home by taking home equity credit
As a salaried person, you
can enjoy the tax-saving on home loan by purchasing a house. By this manner,
you'll own your dream home and avail the tax break also.
So, if you've got taken a
home equity credit, you'll save tax under three sections, viz. 80C, 24 and
80EEA.
Deduction on Repayment of
Principal Amount
Out of the home loan EMI,
the principal amount is eligible for a tax deduction up to Rs.1.5 lakh u/s 80C.
You must have an idea of the principal amount in the EMI. It changes
continuously, thus you ought to ask EMI schedule.
Deduction on Interest Paid on Home Loan U/s 24(b)
You can claim the tax
deduction of interest paid on home loan u/s 24(b) as well. The limit of this
deduction is Rs. 2 lakh for some cases. But, if you have taken the home loan
for a property which is not self-occupied, then there is no maximum limit of
deduction. Hence, you'll claim the entire interest amount u/s 24.
3. Ensure Retirement Pension Through the NPS
National Pension Scheme,
(NPS) maybe a retirement saving scheme. Any person can invest during this
scheme including salaried persons. You have to invest throughout your service
period. A part of your contribution also goes to the shares and bonds.
After retirement, you get
a lump-sum amount. Some amount is also used to give you a regular pension.
Let us see how you'll
save tax through NPS-
Employees’ contribution
in NPS account u/s 80CCD (1)
Your investment in the
NPS account is eligible for a tax deduction up to Rs.1.5 lakh.
Employer’s contribution
in NPS account u/s 80CCD (2)
The employer’s
contribution in your NPS account is also eligible for a tax deduction. But, the
total contribution should be 10% of your salary. The limit is 14% for the
central government employees.
Additional contribution in NPS account u/s 80CCD
(1B)
Besides the above
contributions, you'll deposit an additional amount in your NPS account. And may
get a further tax break up to ₹50,000. This deduction is available only if you
invest more than the prescribed amount. As you know that Employee has to
contribute 10% of their salary. The excess amount is eligible for this
deduction.
4. Invest in PPF
The most popular saving scheme of all of the taxpayers in India. The PPF scheme is designed
for long term saving. Thus you can use it for your Children’s higher education
and marriage as well.
5. Health Insurance for Hassle-free Treatment U/s 80D
Like, Life Insurance, the
government gives you the tax deduction benefit on health insurance as well. So,
invest in any health scheme for hassle-free treatment and avail the tax break
u/s 80D. This section gives you a chance to save tax up to Rs. 1 lakh. Let us
see how-
• If you pay a premium
against health policy for you and your family (including children), you can
claim a deduction of Rs.25,000.
• For dependent parents
with your family above 60 years, the limit of deduction enhances up to Rs.
50,000.
• The deduction may be up
to Rs. 75,000, if your parents are senior citizens. So, Rs.25,000 for you and
your family and extra Rs.50,000 for your parents.
• Moreover, if you and
your parents both are senior citizens, you can claim deduction up to Rs. 1
lakh.
6. Use Children Tuition Fees for Tax Deduction
You can save tax by
paying the tuition fees of your two children up to Rs.1.5 lakh u/s 80C.
Remember this deduction is available for the fee paid to the educational
institute from pre-primary to higher education.
Feature of this Excel Utility:-
1) This
Excel utility prepares and calculates your income tax as per the New Section
115 BAC (New and Old Tax Regime)
2) This
Excel Utility has an option where you can choose your option as New or Old Tax
Regime
3) This
Excel Utility has a unique Salary Structure for Government and Non-Government
Employee’s Salary Structure.
4) Automated
Income Tax Arrears Relief Calculator U/s 89(1) with Form 10E from the
F.Y.2000-01 to F.Y.2020-21 (Update Version)
5) Automated
Income Tax Revised Form 16 Part A&B for the F.Y.2020-21
6) Automated
Income Tax Revised Form 16 Part B for the F.Y.2020-21
7) Individual Salary Sheet
