#*X – The most dreaded three letter word


I know what you are thinking. STOP. I am talking about TAX 😉

It is, as a matter of fact, the most dreaded word currently, since demonetisation. But from our parlance, where most of us fall under the mass-market or mass-affluent or even higher category, why worry?

We should only look at, how much more can one save, against annual earnings. Here again, it’s so simple that we run to CA’s or Tax consultants to understand same & decide.

All you need to understand, first is what is the amount of money one can save under key heads:

  1. 80CC: Limit of 1.5lacs, has multiple options, ranging from debt instruments like PPF, FD, Postal, Insurance to Equity in the form of ELSS – click to understand 80CC
  2. 80CCD: Limit of 0.50lacs, which is only thru NPS – click to know NPS
  3. 80D: Medical insurance up to 25k for the family, & another 25k for seniors
  4. Section 24: Interest paid on existing home loan, with a limit of 2lacs

If you add it up, considering that one can avail all, one can save tax on 4.50lacs of income. Simple grid to explain further:

A** B C D
a) Annual Income 5,00,000 10,00,000 15,00,000 20,00,000
b) Tax Saving Amount** 2,50,000 4,50,000 4,50,000 4,50,000
c) Taxable Income (a - b) 2,50,000 5,50,000 10,50,000 15,50,000
d) Tax free slab 2,50,000 2,50,000 2,50,000 2,50,000
e) 10% Tax slab -- 2,50,000 2,50,000 2,50,000
f) 20% Tax slab -- 50,000 5,00,000 5,00,000
g) 30% Tax slab -- -- 50,000 5,50,000
h) Tax (tax slab on e+f+g) -- 35,000 1,40,000 2,90,000
i) Budget benefit -- 12,500 12,500 12,500
j) Final Tax (h – i) -- 22,500 1,27,500 2,77,500
k) Tax with cess (3%) -- 23,175 1,31,325 2,85,825
l) Tax Saved** 12,875 92,700 1,39,050 1,39,050

**For A, we are not taking home loan into account, as otherwise there will be no income in hand.

**Tax saved, is calculated based on “no tax saving amount”.


My four important “TO DO Rules”, for Tax calculation:

Rule 1: Do you have a home loan?

If yes, you need not have to bother much, as your home loan principle will qualify for 80CC & interest for section-24.

Rule 2: How much are you contributing toward employee provident fund (EPF)?

Check your salary slip & calculate (mainly for salaried).

Rule 3: Write down all your insurance premium you pay, policy wise.

This will give clear picture on medical & insurance towards 80CC.

Rule 4: Write down any other investments you have started towards 80CC.

This includes; ELSS (mutual funds), FD (fixed deposit), PPF, Postal, NPS etc.

Now you wonder, what the heck, do I need someone?

My suggestion; if its ELSS, which offers the best returns & best features, compared to other tax saving instruments, you do need expert guidance here.

Manoj Chahar
Founder & Storyteller at Moneyfrog.in
Manoj is the founder of Moneyfrog.in, with 15 years of corporate experience & expertise in financial markets. Manoj has corporate stints with Kotak Securities, IIFL group & Philips India. He holds an MBA (PGDM) degree from Symbiosis (SIMS) Pune.
His interests include birding & adventure activities.

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