An employer will always deduct tax deducted at source (TDS) from your salary if your salary income crosses the threshold limit. However, there are a few things that you could do to reduce your tax liability that arises from TDS being deducted from your salary.
LTA and Medicals
If your salary break-up does not include travel allowance, you could request your employer to include the same in your salary break-up. Please note, that has a honest tax paying citizen you should be incurring the travel allowance expenses, before claiming an exemption. Travel allowance is exempted up to Rs 1600 per month, or Rs 19,200 each year. The limit earlier was Rs 800, but, Finance Minister, Arun Jaitley recently increased the amount.
Similarly, you can claim medical Reimbursement upto Rs 15,000 each year against your medical bills. Each time you visit the pharmacy or the doctor make sure you take medical bills or consultancy bills and hand the same over to your employer, so as to reduce your TDS liability.
If your company is not offering food coupons or meal vouchers, you can ask them to consider a proposal. A sum of Rs 50 per meal is exempt on meal vouchers. This means that for a 25 day a month working period, meal vouchers can be tax exempt to the extent of Rs 2,500 per month, considering lunch and dinner (Rs. 100 x 25 days).
This means annually a sum of Rs 30,000. Thus, if you are in the 10 per cent tax bracket you can save as much as Rs 3000 on taxes by way of meal coupons and Rs 6000, if you are in the 20 per cent tax bracket and Rs 9,000, if you are in the 30 per cent tax bracket. To read more on meal vouchers and tax exemption click here
Saving TDS through Sec 80C benefits
Apart from the above, to save TDS on salary make sure you utilise the entire amount by investing in section 80C and other instruments.
Among the most preferred routes to reduce your TDS or tax liability from salary would be investing in PPF. The PPF offers you a tax rebate of upto Rs 1.5 lakhs per annum.
Other ways to reduce tax
If you have donated amounts to charity, you can claim tax deduction. However, this has to be to a list of specified institutions and not all and sundry. So, be careful where you donate and make sure that you have the PAN card number of the institution, to help you save on taxes.
LTA To help save tax and reduce TDS
You can also ask your employer to offer you Leave Travel Assistance, which would help reduce your tax liability. However, it is important to remember that you submit proofs of your travel to claim tax benefits for LTA. You can claim LTA 2 times in a period of 4 years. Remember, that this benefit to reduce your TDS or salary is not available for travel outside India.