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Hi All,can anybody please let me know ,how to make deductions regardind the professional tax as well as tds from the salaries and how we can save our tax by showing our investments.Please let me know the percentages for hra,lic etc,
Thanks & Regards,

From India, New Delhi
Consultant, Writer And Trainer
Assistant Engineer, Indian Telephone Industries,


Hi there...

These are few tips on how you can save your income tax by investing smartly and saving yourself from all the tensions and stress...

Here you go....

6 steps to help you avoid investment blunders

Formulate a plan
At the beginning of the financial year, chalk out how much you intend to invest in different asset classes. Then spread out this amount across the next 10-12 months.

Choose correctly
Invest in a tax-saving option on the basis of your overall financial planning. Choose an investment only if it helps you meet a certain financial goal (retirement, child’s education, insurance cover).

Automate your investments
Set up an ECS mandate for your investments in ELSS, Ulips and other options. This will ensure that even if you forget to invest every month, your bank will not.

Avoid long-term plans
Don’t buy insurance products in a hurry. These are long-term products and one needs time to assess and compare the features. Do not commit yourself to multi-year payments.

Know your deductions
Take into account deductions such as tuition fees of children and home loan repayment while calculating how much you need to save under Section 80C. Many taxpayers don’t even know how much they have put in the PF in a year.

Avoid health cover only to save tax
Everybody needs health insurance. That’s why the government gives you a deduction for the premium. Don’t see this as a taxsaving idea. Buy a plan only after careful consideration of its features and clauses.

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From India, Delhi

I shall insert an Excel worksheet for Income Tax Calculation on salary for the Financial Year 2010-11 (Assessment Year 2011-12). Prior to that I wish to explain some details to get an idea to enter the inputs.

On gross salary the following deductions are applicable.

1) Professional Tax

2) House Rent in excess of 1/10th of salary subject to ceiling equivalent to HRA

3) Interest on Housing loan subject to ceiling Rs. 1,50,000.

4) Refund on Housing loan, savings, tution fee to 2 children etc. altogether subject to ceiling Rs.100,000.

5) In addition savings on infrastructure bonds upto Rs. 20,000.

6) Other than the above one lakh, 15000 to 20000 towards medi claim premium, 40000 to 60000 towards treatment on specified diseases like Motor Neuron disease, 75000 to 100,000 towards disabilty etc. are also admissible for deduction.

Now taxable income can be calculated as follows.

Gross salary - total deductions = Taxable income

Tax payee can be categorised into 3.

1) Non Seniors - Male

2) Non Seniors - Female

3) Senior Citizens (65 years old & above)

If the taxable income is Rs. 2,40,000, a Senior Citizen is fully exempted from paying tax. Non Senior Female has to pay in excess of Rs.1,90,000 & Non Senior Male in excess of Rs.1,60,000.

Beyond the above income, one has to pay 10% upto Rs.5,00,000, 20% there after upto Rs.8,00,000 and 30% in excess of Rs.8,00,000. In addition, an education cess @ 3% will be charged on Total Tax.

I shall quote on example.

Gross income of a Non Senior Male - Rs. 12,00,000

Deductions (actual) : Professional Tax - 12000, Housing loan interest - 2,00,000, Total savings/deductions - 2,50,000, Savings on Infrastructure bond - 25,000, other deductions over 1,00,000 - 50,000.

Admissible total deductions (subject to ceiling limits) - 12000+150000+100000+20000+50000 = 332000

Taxable income, 1200000 - 332000 = 868000

For Non Senior Male :

Rs. 1,60,000 is exempted.

For next 340000 (500000-160000), 340000x10% = 34000 -(1)

For next 300000 (800000-500000), 300000x20% = 60000 -(2)

For next 68000 (868000-800000), 68000x30%= 20400 -(3)

Tax - (1)+(2)+(3) = 114400

Also For Non Senior Female Tax is, 114400-3000 = 110400

and Senior Citizens Tax is, 114400-8000 = 106400

Education Cess, 114400*3% = 3432.

Total Tax - Rs. 1,17,832

See Excel Sheet. Enter gross salary and deductions/savings applicable in green colour column. Results will be occured in yellow colour. The red colour is used for static datas.


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Ph. +91 9447 467 667

From India, Bangalore

Attached Files (Download Requires Membership)
File Type: xls Income Tax Calculator.xls (17.0 KB, 278 views)

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