Some Tips to Save Income Tax on Salary Request for Quote
Income tax that charged on the annual income earned by an individual. The amount of tax paid will depend on how much money you earn as income over a financial year.
The tax filing season in every assessment year acts as a task for salaried individuals. Being an Indian taxpayer, you need to know about your tax slab and the various income tax deductions for salaried employees. It will help you to figure out how tax saving for the salaried class works and avoid complications that may arise during tax planning. If you find the appropriate financial instruments, you can reduce the amount of income tax payable for salaried employees.
However, understanding the income tax deductions for salaried employees can become complicated if not done well. There are several tips that allow tax benefits for salaried employees and can have a significant impact on your financial planning. So, let’s take a deep look into the tax saving options for salaried people.
With a conveyance allowance, also called a transport allowance, you can get your salary structured in such a way that your company will provide you with a transport allowance. Employees of a company are given transportation allowances to compensate for their travel from their homes to their respective workplace locations. Allowances are generally offered to employees on top of their basic salary. The company offers car expense reimbursement to its employees if these expenses are incurred for official duties.
House Rent Allowance (HRA)
You can claim HRA if you are paying rent and living in rented accommodation. HRA can be fully or partially exempt from tax. If you don't live in rented accommodation but still get a house rent allowance, the allowance will be fully taxable. A HRA exemption is also available if you live with your parents. You can pay them rent. But your parents must include this rental income on their tax return. Don't worry if you were unable to submit rent receipts to your employer on time. You can claim the HRA exemption at the time of filing your tax return. Do remember to keep rent receipts safely and maintain details of payments made towards rent.
Leave Travel Allowance (LTA)
Tax on fare expenses for a trip made within India can be used to save tax on LTA. For travel within India, an employee can avail an exemption for the trip under LTA. This exemption is only for the shortest distance on a trip. Only the trip taken with your spouse, children, and parents is eligible for reimbursement. As a result, you can claim this exemption after incurring the expenses and submitting the bills to your employers. This tax benefit can only be claimed via your employer, so remember to submit LTA bills on time.
Taxpayers can save taxes on the amount they have spent on medical treatments. If people provide their medical bills, then their medical expenses become tax-free. Employers also provide medical benefits to all employees. The maximum amount of money people can claim using medical bills in a year is Rs. 15, 000. The Income Tax Act allows deductions under Section 80D, Section 80DD, and Section 80DDB on income that has been spent by the taxpayers insuring their own health or their relative’s health. The deduction amount may vary for each section and depends on the type of insurance policy the taxpayer has purchased.
Education is one area towards which we pay a lot, spending huge amounts to arm ourselves and our loved ones with degrees. People can save tax by opting for an education loan for higher education for themselves, their children, spouse, etc. Section 80E of the Income Tax Act allows people to claim deduction on the amount they have spent for paying the loan interest. There is no maximum limit on the number of deductions they can claim. Section 80E only allows individual taxpayers to claim deductions.
The lower your taxable income, the lower your tax liability. There are multiple provisions by which you can lower your taxable income. For example, under section 80C, you can save Rs 1.5 lakhs annually. 80C investments include FDs, Equity Linked Savings Scheme, insurance policies, etc. Every month, the employer deducts a part of your total income tax as Tax Deducted at Source (TDS). This is a significant portion for a salaried employee. Furthermore, the employer provides details of the tax deducted on Form 16. While filing returns, remaining you are entitled to make the remaining payment.
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