What are the best methods to save Tax in India for an income group of 5-15 LPA net salary?

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If you are a salaried individual earning between Rs 5 lakh and Rs 15 lakh net salary on an annual basis, then you must first know about your existing tax liability. Once you ascertain the amount of tax that you have to pay, you must plan to save tax by availing tax deductions under the relevant provisions of the Income Tax Act. For optimum tax savings, you can choose to invest in tax saving options, make voluntary donations, take a home loan or ask your employer to restructure your salary. You must always remember to plan early for tax savings, preferably at the beginning of the financial year, to prevent any stress or hassle while filling your annual Income Tax Return (ITR).

Understanding income tax slabs: The income tax department ascertains your tax liability on the basis of your annual income. As per the tax slabs, an individual below 60 years is categorised under the tax slab of 5% for an annual income between Rs 2.5 lakh and 5 lakh. The tax slab of 20% is applicable for an annual income between Rs 5 lakh and Rs 10 lakh, while the 30% tax slab is applicable for those individuals earning above Rs 10 lakh. You must also remember that an additional 4% health and education cess is also payable. The government provides a full tax rebate for individuals earning up to Rs 5 lakh. From the financial year 2020, the government has provided for a new tax slab for individuals willing to forego certain deductions and tax exemptions.

Best tax saving methods: Read on to know more about the best methods to save taxes:

• 1.Investment in tax saving options - The foremost way for tax saving is through investing your hard-earned money into various tax saving instruments. Here, you can avail tax deductions up to Rs 1.5 lakh under Section 80C of the Income Tax Act. You can choose to invest in:
• Employee Provident Fund (EPF): This is a retirement benefit scheme for salaried employees. Here, 12% of the basic salary and Dearness Allowance (DA) is deducted by the employer. This fund is then deposited in government-recognised provident fund schemes.
• Public Provident Fund (PPF): These are government-backed investments with a minimum lock-in period of 15 years. You can partially withdraw funds after 7 years, and earn an interest of around 8%.
• Equity Linked Savings Scheme (ELSS): These are tax saving mutual fund schemes providing the twin benefits of tax saving along with high market-linked returns. These have a minimum lock-in period of 3 years.
• Sukanya Samriddhi Account: You can invest a maximum of Rs 1.5 lakh annually in this government-backed scheme. As a parent of a girl child, you can open an account in the name of your girl child, and earn interest up to 8.5%.
• Tax Saving Fixed Deposit: These are similar to traditional fixed deposits, but have a minimum lock-in period of 5 years. You can earn interest payouts ranging from 7% to 9%.
• National Saving Certificate (NSC): These have a minimum lock-in period of 5 years. The interest payment of up to 8% is compounded on an annual basis.
• National Pension Scheme (NPS): This is a social security scheme by the government, providing retirement benefits to employees of public, private and unorganised sector. It provides for two accounts, Tier I and Tier II. The former is a mandatory account, and allows for withdrawal of funds only after retirement.

• 2. Making voluntary donations - You can also consider tax saving by making donations. You can make donations in various relief funds, like the PM relief fund, funds for control of drug abuse, clean Ganges fund, or make voluntary contributions to recognised NGOs. All these donations are completely exempt from taxation under Section 80G of the Income Tax Act.
• 3. Taking a home loan – Did you know that taking a home loan could also provide you with tax savings? Under Section 80C of the Income Tax Act, making payments for both interest and principal amount of your home loan is exempt from taxation.
• 4. Restructuring of salary: You can request your employer to restructure your salary in such a way that allows for tax saving allowances. These allowances include House Rent Allowance (HRA), conveyance, personality development, medical treatment, telephone, uniform, office entertainment etc. You can also claim tax exemptions on your Leave Travel Allowance (LTA), twice in four years.
  
  

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Conclusion: You can avail tax savings through various methods, including investment in Unit Linked Investment Products (ULIPs). ULIPs provide the dual benefits of investment and protection through high, market-linked returns and life insurance. You can zero in on the Invest 4G plan from Canara HSBC Life Insurance. This is a protection and savings oriented Unit Linked Insurance Plan allowing tax savings on making premium payments as well as on maturity benefits.