How to Save Tax for Salary Above 20 Lakhs?

If you want to know, how to save tax for salary above 20 lakhs, you can go through the below given ways for the same.

How to Save Tax on 20 Lakhs Salary?

• Utilise the maximum limit available under Section 80C, which is Rs. 1.5 lakhs. Invest in instruments such as EPF, PPF, ELSS, NSC, tax-saving FDs, NPS, and life insurance premiums to avail of this deduction.

• Invest in health insurance policies for self, family, and parents. Premiums paid towards health insurance policies are eligible for deduction under Section 80D. For individuals below 60 years, the maximum deduction is Rs. 25,000 (Rs. 50,000 if parents are senior citizens).

• An additional deduction of Rs. 5,000 is available for preventive health check-ups.

• Contribute towards NPS to claim deductions under Section 80CCD(1) up to Rs. 1.5 lakhs. An additional deduction of up to Rs. 50,000 is available under Section 80CCD(1B). This can help in optimizing tax savings.

• If you receive HRA as part of your salary and pay rent, you can claim HRA exemption under Section 10(13A). Ensure that you submit rent receipts and rental agreement to your employer to avail of this benefit.

• If you have a home loan, the interest paid on the loan is eligible for deduction under Section 24(b). The maximum deduction available is Rs. 2 lakhs for a self-occupied property. If the property is let-out, there is no upper limit on the interest deduction.

• Donate to eligible charitable institutions to claim deductions under Section 80G. Ensure that you retain the receipts provided by the charity for documentation purposes.

• Consider investing in tax-free bonds issued by government-backed institutions. Interest earned on these bonds is tax-exempt, providing an avenue for tax-efficient returns.

• If you have taken an education loan for higher studies, the interest paid on the loan is eligible for deduction under Section 80E. There is no upper limit on the deduction amount.

• Long-term capital gains (LTCG) from equity investments held for more than one year are tax-exempt up to Rs. 1 lakh per financial year. Consider investing in equities for long-term wealth creation while availing of tax benefits.

This is how to save tax for salary above 20 lakhs.

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