2025-05-06
1189 Views
5 minutes read
Share
Begin securing your future
Application Status
Name
Date of Birth
Plan Name
Status
Name of the policy holder
Policy Holder NamePolicy No.
Policy NumberAddress of the Policyholder as per records
AddressUnclaimed Amount
Unclaimed Amount
Sorry! No records Found
Thank you for your interest in our product. Our financial expert will connect with you shortly to help you choose the best plan.
What is Tax Liability in Income Tax?
You may either be involved in a profession or run a business, or you could also receive a regular salary. No matter what your field is, you are required to pay taxes on the income you earn.
The income tax system in India is very progressive. That is, the more you earn the more tax you have to pay. This tax that you pay is used by the government for the development of the country. This money is used for building infrastructure, advancing facilities, funding employees, etc.
What is Tax Liability?
The tax that you owe to the government as per the income you earn is known as your tax liability. This is the amount that you are liable to pay to the tax authorities.
Whether you are an individual or a company, you have to pay taxes. If you evade tax, then you can land in serious trouble and even go to jail.
How is Tax Liability Calculated?
In India, the income tax that you are liable to pay is calculated based on the income tax slab you fall into. Each slab is associated with an income range and a specific tax rate. Here are the rates.
Old Income Tax Regime:
| Income Range (In Rs) | Tax Slab Rate |
| 0-2.5 lakh | 0% |
| 2.5-5 lakh | 5% |
| 5-10 lakh | 20% |
| Above 10 lakhs | 30% |
* All amounts before cess and surcharge
New Income Tax Regime:
Income Range (In ₹) | Tax Slab Rate |
Up to ₹4 lakh | 0% |
4,00,001-8,00,000 | 5% |
8,00,001-12,00,000 | 10% |
12,00,001-16,00,000 | 15% |
16,00,001-20,00,000 | 20% |
20,00,001-24,00,000 | 25% |
Above 24,00,000 | 30% |
* All amount before cess and surcharge
Understand the Income Tax Slab for FY 2023-2024.
Higher education cess of 4% applies to the tax liability estimated as per slabs. Surcharge may apply where your income exceeds the following threshold:
- 10% for income exceeding Rs 50 Lakhs
- 15% for income exceeding Rs 1 crore
If surcharge applies to your tax liability cess will apply after the surcharge.
FAQ
First of all, your gross total income is taken into account and all applicable deductions/exemptions are deducted out of it, the resultant amount is the net income, upon which the Income Tax is calculated, on the basis of income tax slabs that are announced each year in the Union Budget.
How much tax you can save depends on your financial portfolio and profile. The most common avenue for tax-saving is Section 80C, which allows you deductions up to Rs 1.5 lakh in your taxable income. The implication is that you can save up to Rs 46,800*in taxes in a year, depending upon the income tax slab you belong to. Similarly, other avenues like interest on loans, health insurance etc also provide deductions capped at a certain amount.
*Tax saving of Rs.46,800/- is calculated at the highest tax slab of 31.2% (including 4% Cess) for an individual assessee on life insurance premium of Rs.1.5 lakh, who is having taxable income upto Rs.50 lakhs.
The best tax-saving investment would be an investment which offers the flexibility of investments, withdrawals and asset allocation as per your risk appetite. ULIPs, Guaranteed Saving Plans, ELSS, PPF, etc, are some of the best tax-saving options in India you can invest in.
If the interest earned or maturity value of your investment is tax-free you may not need to pay a tax on your investment. However, many tax-saving investments under section 80C do not offer tax exemption on accrued interest or maturity. Thus, you can choose the tax saving investments where accrued interest, partial withdrawals and maturity are tax-free.
You can choose investments that are tax-exempt: not an exhaustive list, but includes Equity Linked Saving Scheme (ELSS), Public Provident Fund (PPF), life insurance plans, Unit Linked Insurance Plans (ULIPs), Sukanya Samriddhi Yojana, Senior Citizens Savings Scheme (SCSS), National Pension Scheme (NPS), Bank Fixed Deposits.
You can claim almost any tax deduction under sections 80C and 80D without showing or submitting a receipt. However, you should keep the receipts safe until your income tax return has been accepted by the income tax department. In the case of other tax-saving deductions, you may need to show receipts and other documents with your ITR.
There is no limit to the number of tax-exempt investments one can have in a financial portfolio. However, it is important to note that there is a limit to how useful any instrument can be for the purpose. This is because the amount of deduction that can be claimed for specific instruments is capped at a maximum value. At the same time, keep your financial portfolio balanced so that it also provides safety, returns and liquidity.
The maximum limit of investment that will reap the benefits of deduction from taxable income under Section 80C is Rs 1.5 lakh.
Investing in a health insurance plan for family and parents, and investing an additional Rs 50,000 into an NPS Tier-I account are a few ways you can save tax beyond Rs 1.5 lakhs. Other tax-saving options include buying or constructing a house with a home loan. You can claim an additional deduction of up to Rs 2 lakhs on the interest paid for the loan.
Apart from Section 80C, various deductions and exemptions has been provided under the provision of Income Tax Act, 1961 like deduction under section 80D can be claimed for the payment of health insurance, deduction upto Rs 50,000 on home loan interest under Section 80EE. Any donations you make to charitable institutions are also allowed as deduction under Section 80G, subject to condition prescribed therein.
You can easily lower your tax on income by investing in tax-saving investment plans. A few great tax saving options are ULIP and life insurance plans, NPS tier-I account, PPF, Senior Citizen Saving Scheme, etc.
This way, you can reduce the amount of your taxable income. Besides, you can claim deductions on your taxable income on account of expenses such as repayment of home loan principal, child’s education fee, expenses during home purchase etc. You should start learning about tax-saving options in India. Tax-saving investments and expenses can reduce your total tax liability every year.
You can reduce your tax liability to zero if you utilise the common tax saving investments and sections such as section 80C, 80D, 80CCD and 24B deductions to the limits. Additionally, complete deduction requires you to claim both 24B and HRA simultaneously. This is only possible if you are paying both rent and home loan EMIs. If you are in this situation, your tax liability can go down to zero.
While looking for tax-saving options for this income you should consider present as well as future income tax. Thus, investing in EEE plans like NPS, ULIP, etc will make sense. You can also invest in ELSS plans where you can avoid long-term capital gains tax if the gain is less than Rs 1 lakh.
First of all, make investment of Rs 1.5 lakh in investments instruments covered under Sections 80C to reduce your taxable income. Claim deductions for the interests paid on home loan and/or education loan if any. Get a health insurance policy and claim for other medical expenditure like preventive medical healthcare check-up, expenditure on rehabilitation of handicapped dependent relative, among others. Mainly, the idea should be finding out which tax saving avenues fit well with your larger financial goals and invest in them!
FD interest or fixed deposit interest income gets taxed as per the income slab rates of individual taxpayer. Banks or post offices deduct tax or TDS when the aggregate interest income on all fixed deposits exceeds Rs 40,000 per financial year. The limit is Rs 50,000 in case of senior citizens.
First of all, make use of the Rs 1.5 lakh deduction allowed under Section 80C. This can be done by making investments in life insurance premium, Equity Linked Saving Scheme (ELSS), Public Provident Fund (PPF), Unit Linked Insurance Plans (ULIPs), Sukanya Samriddhi Yojana, Senior citizens Savings scheme, National Pension Scheme (NPS), among others.
Second, make use of the deductions available in respect of health insurance and other medical expenses. Under Section 80D of the Income Tax Act, 1961, a deduction of up to Rs 25,000 is allowed in a year in terms of the premium paid towards a health insurance policy of Self and your family i.e., Spouse and children. This can include preventive healthcare check-ups too upto Rs 5000/-. Under section 80D you can also claim additional deduction upto Rs. 25000/- (Rs. 50000 in case of senior Citizen) for health insurance of your parents.
Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.
Tax Savings - Top Selling Plans
We bring you a collection of popular Canara HSBC life insurance plans. Forget the dusty brochures and endless offline visits! Dive into the features of our top-selling online insurance plans and buy the one that meets your goals and requirements. You and your wallet will be thankful in the future as we brighten up your financial future with these plans.
Family Shield: Enhanced Protection
iSelect Smart360 Term Plan
- 3 Plan options
- Life cover till 99 years
- Steady income benefit
- Block your premium at inception
Fixed Returns, Zero Risks & Worries
iSelect Guaranteed Future Plus
- 4 Plan options
- Life cover + Guaranteed benefits
- Accidental death benefit
- Premium protection cover
Start Young, Pay Less, Stay Secured
Young Term Plan
- Life cover till 99 years
- Coverage for spouse
- Block your premium rate
- Covers 40 critical illness
Recent Blogs
How High Earners Can Save Tax Beyond Section 80C?
21 July '25
238 Views
Learn how high-income earners in India can reduce tax liability legally beyond Section 80C using smart deductions. Use HRA, NPS, 80D, capital gains, and more to save big on tax exemptions & investment strategies.
Read More
Tax Saving
Which Tax Regime is Right for You in 2025?
21 July '25
152 Views
4 minute read
Not sure which tax regime suits you in 2025? Learn how to compare old vs new regime based on income, deductions, and financial goals.
Read More
Tax Saving
What Is Inheritance Tax? Meaning, Rules & Exemptions
21 July '25
157 Views
Learn what inheritance tax means, how it works in India, and who is liable to pay. Understand rules, exemptions, and tips to manage inherited wealth.
Read More
Tax Saving
Don’t Miss These Income Sources While Filing ITR
15 July '25
158 Views
6 minute read
Learn which income sources you must declare in your ITR for AY 2025-26. Avoid penalties and ensure accurate tax filing with this essential guide.
Read More
Tax Saving
Tax Benefit Comparison: ULIPs vs. Traditional Savings Plans
14 July '25
109 Views
4 minute read
Explore how tax benefits differ between ULIPs and traditional savings plans. Learn which option suits your financial goals and offers better tax efficiency.
Read More
Tax Saving