Hi I'm a salaried person with an annual income of 4 L/annum. I don't know much about tax saving. What can I do save tax in India ?
and Is PF/Pension and Gratuity in salary taxable in private company if salary is 4 lac ?
Thanks in advance.
There are several tax free investments that you can do India. In 2014 budget, Govt has increased the tax free investments under section 80c* to 1.5 lakh per annum.
Before writing about the different investment options, I would like to write about the taxable income.
In your case income is 4 lakh per annum, out of which 2.5 lakh(as per 2014 budget) of that income is tax free. Now your taxable income is 1.5 lakh. Out of that you can claim housing allowance, travel allowance(can be claimed once in 2 years), home loan, kids tuition fee and Medical expense(upto 15K).Also, the PF component deducted from your salary is tax free. After considering all this your taxable income will be around 60-75K(Appropiate numbers, not exact). Now you need to show investments which is equal to your final taxable income. Only 1.5 lakh of your investment will be tax free, if your final taxable income is more than 1.5 lakh then you will have to pay tax on that amount depending on which tax bracket you belong to.
Now coming to tax free investments, there are several way in which you can invest. Am gonna mention only the ones that are popular. You will get a good idea if you can google out some good sites.
There are many way in which you can do tax free investment, I can write multiple pages about it. But, the best way you can start is by discussing with seniors in your office and searching in the internet by yourself.
This is one such website where you get more information. All the best!!
When it comes to investment, start investing early in your career even if it means leading a frugal lifestyle.