If you are getting a salary, there are various ways in which you can save money from it. Take a look at 8 smart ways to save tax on your salary. Some of these can be implemented by yourself, while a few others may need the intrevention of your company.
Opt for meal vouchers
If your company is offering meal vouchers go for the same. You get a tax exemption of up to Rs 30,000 on the same. What this means is if you are in the highest tax bracket, you can save up to Rs 10,000 in taxes.
In case you are incurring expenses on travel with relation to work, make sure your salary has a conveyance allowance.
Conveyance allowance is exempt up to Rs 1,600 per month. So, the tax benefits you get is Rs 19,200 per year. In case you are even in the 10% tax bracket, you save almost Rs 2,000, while those in the highest tax bracket save almost Rs 3,840 by way of taxes.
There are many other allowances that help you save tax. If you are incurring telephone expenditure as an example, make sure that it is not in a lumpsum salary, but, as part of a allowance. Some allowances are tax exempt. However, you must incur the expenditure and you cannot simply claims for the same. Uniform allowance, children's hostel allowance, helper allowance are other allowances that are tax exempt.
In case your company is not offering LTA, make sure you ask. LTA is exempt in a block of 2 years. However, you need to submit bills and must travel. It is important to remember that LTA covers only domestic and the mode of transport has to be air, rail or public transport.
Increase PPF Account
Provident Fund (PF) account allows you tax exemption under Sec 80C of the Income Tax Act. By increasing your PF amount, you can get good tax exemption. In fact, the amount that is tax exempt if Rs 1.5 lakhs per year. However, if you are already covered under other 80C instruments like insurance etc., it would be of little use to increase the PF contribution.
Submit medical bills
Make sure you submit medical bills. You get a tax break of Rs 15,000. It is important to note that you must incur the expenditure on yourself or your dependents. You simply should not claim tax deductions otherwise.
8 Smart Ways To Save Tax On Your Salary
Make sure that you use the full benefits of Sec 80C by investing in instruments like LIC, PPF, EPF, home loan principal amounts etc. Tax benefits under Sec80C is Rs 1,50,000.
So, if you are in the 10% tax bracket, you save Rs 15,000 every year, in the 20% tax bracket you save Rs 30,000 and Rs 45,000 in the highest tax bracket.
Submit the proofs on time
Make sure that you submit the proof on time, so there is no TDS from salary at the end of the month.