My first job -- Help me understand my salary structure & taxes

[MAGNeT]

There is no rocket science in this case to go for extensive tax planing in this package.

I'll advice to go for PF and PPF though long its better to start this savings earlier in life rather later.I see people thinking to start ppf at stage of 34-36+ with kids already 4-6+ age.

Also since the package is of just start.Will suggest to save first and than spend what is left after saving.

Tax upto 2 lakh salary is not applicable.Amount above it charged 105 as tax.

If 1 lakh is invested in instruments like 80C than further 1 lakh amount is save from tax.

If your mother or dad is non working person with house on his/her name.You can pay some amount to them which you can show later as their salary as they too have their respective tax limits of 2 lakhs or 2.5 lakh(if they senior citizen) and save tax.

 

[Lord Nemesis]

Sir, kindly read this. Would help you.
Know the difference between tax planning & tax avoidance - Economic Times

Oh, I know the difference between panning and evading and what you suggested would not count as evading only under proper conditions which most people do not bother about.

In general, getting rent receipts/rental agreements for bloated amounts (disproportional to market rates) from their own parents/relatives/friends quite often without actually even paying the rent and the supposed owner not even filing taxes, Getting medical bills created at a pharmacy for a small cost at end of year to claim the medical reimbursement amount etc. are common practices by people to evade taxes. I have even known of extreme cases where manager grade employees with high salaries grouped together to start an NGO just to channel their money and take the tax benefits provided by the govt to charitable institutions. There is no end to what people do to avoid taxes. Often, there won't even be any way to prove wrong doing from a legal angle.

I was just saying that our politicians (and people connected to them) also do such things to make their transactions look legit. For instance people like Robert Vadra do a lot of things that are not right, but still fall into the legal boundaries and their lawyers ensure that, but the people who do similar sort of things themselves to avoid taxes do not want to look at it that way when people like Vadra do it at a larger scale.

 

[onlyravi]

To be on the legal side, the person receiving the rent would have to pay income tax on the amount.

Would be fun if the OP's account came into scrutiny and his mom/dad got fined a few lakhs for hiding rental income

This is just assumption.
But what if OP's mother is a housewife. She can still show the income and get a relief from tax. Also now since its not mandatory to file returns for taxable incomes below 5L, she wont have to bother about hassles of filing the returns and she is completely in the allowed tax slabs (paying zero tax).