To save tax on a salary of 7,20,000 in Mumbai, India, you can consider the following practical tips and strategies:
1. Utilize Section 80C Deductions: Invest in tax-saving instruments like PPF, EPF, NSC, ELSS, etc., to claim deductions up to 1.5 lakh under Section 80C of the Income Tax Act.
2. House Rent Allowance (HRA): If you are staying in rented accommodation, ensure you claim the HRA exemption as per the prescribed rules.
3. Standard Deduction: Take advantage of the standard deduction of 50,000 available for salaried individuals.
4. Leave Travel Allowance (LTA): Plan your travel and claim LTA exemption for your leave travel expenses within the specified limits.
5. Medical Reimbursements: Submit medical bills to claim tax benefits on medical reimbursements provided by your employer.
6. NPS Contribution: Consider investing in the National Pension System (NPS) to claim an additional deduction of up to 50,000 under Section 80CCD(1B).
7. Professional Tax: Ensure that the professional tax deducted by your employer is reflected in your Form 16 and claim it as a deduction.
8. Tax Planning: Consult with a tax advisor to explore other tax-saving options like NPS, health insurance premiums, donations, etc.
By strategically utilizing these tax-saving avenues, you can effectively reduce your tax liability and optimize your take-home pay.