Individual tax payers await each budget with expectation of measures that will help them pay less tax. This budget has brought a mixed bag for salaried taxpayers. Let us look at some existing provisions of the Income-tax Act (IT Act) and budget updates which may help in reducing your tax bill.

Your gross salary is not all taxable

Yes, the salary you get is taxed only after accounting for various deductions and exemptions which can be availed by submitting specified payment proof to their employers. Further, this budget has proposed bringing back the 'standard deduction'.

Interest on a loan taken for purchase/construction of house can be claimed as a deduction. The limit for self-occupied property is Rs 2 lakh. For property that has been let out, there is no limit.

In addition to the interest paid in the current year, you can claim tax deduction for interest paid during under construction stage of the house. This can be claimed for 5 years starting from the year of completion of construction.

From financial year 2017-18, in case you suffer a loss from house property, the loss can be claimed every year, though the limit is capped at Rs 2 lakh. The remaining loss can be carried forward and deducted from taxable income in subsequent 8 years, subject to the limit of Rs 2 lakh per year.

The principal repayment can be considered for deduction under Section 80C.

These deductions continue unchanged by the present budget.

Save for the future and get tax breaks

Section 80C of the IT Act provides deduction from total income for investments in specified instruments like Provident Fund, Public Provident Fund, National Savings Certificate, ULIP, ELSS funds, fixed deposits and towards payments such as life insurance premium, tuition fees, etc. up to Rs 1.5 lakh.

Contributions made to National Pension Scheme get a deduction of Rs 50,000 in addition to the Rs 1.5 lakh provided by Section 80C limit.

If an individual has paid interest on education loan taken for pursing higher education for self, spouse or children, deduction is allowed for the same.

Section 80D provides deduction towards medical insurance premium and/or payment for preventive health check-up for individual and dependent family members. Budget 2018 has proposed an increased deduction for senior citizens to allow all senior citizens to claim benefit of Rs 50,000 per annum in respect of any health insurance premium and/ or any general medical expenditure incurred.

2Deductions and exemptions that can save taxes-Infographic-TOI2

Claim exemption for savings account interest/deposits

A deduction of Rs10,000 is available for interest income received by individuals from a savings account with a bank, co-operative society or post office in India.

Budget 2018 proposes to provide a deduction of Rs 50,000 for interest from savings, fixed deposits and recurring deposits in case of resident senior citizens.

Taxation of long term gains on sale of equity shares and mutual funds

As per existing provision of the IT Act, when an individual has investments in listed equity shares or equity mutual funds and sells the same after 12 months of holding, the long term capital gains would be exempt from tax.

However, in Budget 2018, the finance minister has proposed that any gain exceeding Rs 1 lakh per annum be taxed at 10 per cent without indexation benefit. For the shares or mutual funds that were acquired before February 1, 2018, the cost of acquisition can be determined based on the value on such date as per formula specified.

Dividends received from listed equity shares or equity mutual funds continue to be exempt unless the amount received is more than Rs 10 lakh.

The taxable income determined after considering the above mentioned deduction and exemptions would be taxed based on the slab rates applicable to individuals. While Budget 2018 has not made any changes to the tax rate, the existing 3 per cent education cess has been replaced by "Health and Education Cess" of 4 per cent.