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Querist : Anonymous

Querist : Anonymous (Querist)

18 November 2011 I work as a teacher in a private school. Recently my salary has been incremented to Rs 25000 per month. Where should I invest money to save tax?

CA SUMiT PATWARi

CA SUMiT PATWARi (Expert)
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19 November 2011 Let us first discuss some basic deductions available under heads of income level under the head "income from salaries"

Professional tax paid by you will be deducted from your gross salaries

If you are living in a rented house in your name, and you are getting HRA as a component of salary, you will be eligible for a deduction.

Conveyance Allowance @Rs800 pm (Rs9600 pa) would be exempt if it forms a component of your salary.
There are other deductions as well. I have discussed simpler ones.

Your annual income would come to Rs 300000(not considering above deductions)
So if you invest somthing like Rs 110000, your tax liability would be nil considering Rs 190000 basic exemption limit for women.

Out of this Rs 110000;
Maximum Rs1,00,000 can be invested in class of investments specified in Section 80C like: PPF (max Rs70K investment allowed, investment for 15 years minimum); National Savings Certificate; Post office MIS Scheme; some amount Equity linked Savings scheme can also be considered if you can afford some risk. If you are already paying any home loan(principal amt) or life insurance premium then these can also be claimed as deduction u/s 80C
Rest 10,000 can be invested u/s 80CCF infrastructure bonds (deduction of max 20,000)