Tuesday, February 2, 2016

Tax Planning for Salaried Individual

There are no. of ways being within the purview of the Indian income tax act for salaried individual to save taxes. 
Lets discuss few of the most popular strategies for FY 2015-16 to save taxes 


  1. Save Tax u/s. 80C, u/s. 80CCC and u/s. 80CCD
  2. Save Tax u/s. 80D – Mediclaim Policy
  3. Save Tax u/s. 80DD and u/s. 80DDB
  4. Tax Planning through Home Loan
  5. Tax Planning through RGESS: u/s. 80CCG

1. U/s. 80 C, U/s. 80CCC and U/s. 80 CCD

  • An individual can invest in an instrument as specified U/s. 80 C, U/s. 80CCC and U/s. 80 CCD
  • Maximum Combined deduction allowed under these section is Rs.150000
  • An additional investment of Rs.50000 over and above this limit is allowed, if an individual invest in NPS
  • In total, an individual can claim Rs.200000 under these 3 section 
  • Most popular investment choices u/s. 80C is
  1. Equity Linked Savings Scheme (ELSS)
  2. Life Insurance Policies
  3. Public Provident Fund
  4. 5 year tax saving Bank FD
  5. National Savings Scheme (NSC)
  • u/s 80CCC one can invest in a pension policy of an insurance company
  • u/s 80CCD an individual can invest in National Pension Scheme (NPS) 

2. Sec 80 D – Mediclaim

  • u/s. 80D, An individual is allowed claim deduction on expenditure if a premium is paid towards mediclaim policy for self & family and mediclaim policy for parents. 

3. Sec 80 DD and Sec 80 DDB
u/s. 80DD Deduction is available on

  • Expenditure incurred on medical treatment, training and rehabilitation of handicapped dependent relative
  • Payment or deposit to specified scheme for maintenance of dependent handicapped relative.

u/s. 80DD medical expenditure can be claimed

  • Where disability is 40% or more but less than 80% - fixed deduction of Rs 75,000
  • Where there is severe disability (disability is 80% or more) – fixed deduction of Rs 1,25,000.

u/s. 80DDB Deduction is available on

  • Expenditure actually incurred by individual on himself or dependent relative for medical treatment of specified disease or ailment

u/s. 80DD Amount of deduction will be lower of amount actually paid on medical treatment or

  • Individual <60 of Age – Rs.40000
  • Individual >60  but <80 Age – Rs.60000
  • Individual >80 Age – Rs.80000

4. Tax Savings on Home Loan

  • Indian income tax law gives opportunity to individual investor to build wealth in the form of residential house
  • An individual can  leverages tax while building his own home
  • Buying House property on a home loan could cut down your tax bill significantly
  • As per Indian tax law, an individual is allowed to claim maximum deduction of  

            Rs.2,00,000 p.a. against interest component of your Housing loan 
            Rs.1,50,000 p.a. of principle paid for the housing loan against u/s. 80C

5. Tax Planning through 80CCG - RGESS

  • Under Rajiv Gandhi Equity Saving Scheme (RGESS) you are allowed to invest in direct equity share or eligible MF scheme.
  • Investors whose gross total income is less than Rs. 12 lakhs p.a. can invest in this scheme
  • For first time investor in the equity market
  • Deduction is lower of 

          50% of amount invested in equity shares or
          Rs 25,000

Credit to
Ankit Taprania


  1. I am interested related income tax planning.

    1. Thank you for ur comment Mr.Kailash Agarwal,
      This article credit goes to Mr.Ankit Taprania.

      We will update more article on Income Tax planning.

      Thanking you

  2. Simple, precise & clear. Thumbs up

    1. Dear Mr.Prem Sahani,

      Thank you for ur comment.

      Thanking you


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