How is tax deducted from a salary?
Tax is deducted by the employer each year. When your salary for a year is calculated, the employers see which tax bracket you fall into and correspondingly removes a certain amount as tax from you. This is called tax deducted at source. You will have to declare this in the ITR-1 tax returns.
Is salary tax paid monthly or yearly?
While tax is paid every month, it is calculated every year. Income tax is paid by individuals, companies, and businesses. While you may notice in your salary slip that the tax has been deducted monthly, it is calculated annually.
How can I save tax?
You can save tax by investing in ELSS, FDs, and insurance policies, and PPFs. You can save up to ₹1.5 lakhs in this method. Check out other tax saving schemes under Section 80C of the Income Tax Act.
What are some of the tax exemptions for salaried persons?
If you want to avail of tax exemptions, you can try to invest in tax-deductible vehicles such as ELSS, PPF, FDs, etc., or else you can take a home loan or loan for higher studies. Also, donations, deductions on savings accounts, medical expenditures, and insurance premiums act as common exemptions. So invest in these schemes and avail of these benefits of tax exemption for salaried people.