Hi all hope you all are doing great! As promised today we will share you with actual examples of deduction. In these examples we will make use of the sections & sub sections we have learned till date. By this we will be going to see how much an individual can save tax which he or she was not doing earlier.
We will learn from life of Mr. Paras Sharma; our examples will be based upon two scenarios first without home loan & second with home loan. So without wasting more time lets begin:
This example constitutes of usual investment option:
This example constitutes investment under home loan option:
If you have observed we have kept PPF & ELSS investment Zero, reason behind it is individual sustenance (capability of person to invest against its necessary spending). Considering this if Mr. Paras manage to invest Rs. 14000 more in PPF or ELSS his Net Taxable income become less than Rs. 5 Lac, thus resulting into Zero tax liability. Because as per latest budget under Section 87A if Net Taxable income become less than Rs. 5 Lac than individual tax liability become Zero. But remember he need to fill the income tax (ITR) for claiming this.
With this we end our blog series on Basics Of Income Tax – For Beginners, we will come up with another series on Basics Of Income Tax – Advance latter in this year. But soon we will be going to release our next topic on Retirement Planning; it will explain you with all in n outs of it in simplest usable form.