5 Best Ways to Save Tax for Salaried Employees |
Posted: November 15, 2017 |
There are a myriad number of options available. One has to make certain rational investments or incur some of the expenditures that are treated as exemptions while calculating taxable income. Here we list the five best ways to save tax for salaried employees so that they can benefit out of that:
HRA is either fully or partly exempted from being a taxable income, provided the salaried employees do not own a residence of his own in any other place. In case you don’t live in a rented place and still get HRA, the allowance will be fully taxable. The least that amounts among the deduction option available shall be subjected to tax deductions at the time of filing income tax returns. The deductions may be (a) 25% of the total income of the employee (b) Rent paid by him minus 10% of his total income (c) Rs. 5,000 whichever is less. One must maintain the rental receipts and should be able to produce the details of payments made towards rent at the time of filing a claim for deductions.
The maximum deduction available in reference to section 80C is Rs. 1.5 Lakhs. You may incur expenditures like contribution to EPF, pay an insurance premium, children’s tuition fees. Also, the amount of investments you make in PPF or ELSS is exempted from tax and so are investments in National Savings Certificates and ULIPS. Consider going through all the clauses of Section 80C in details and choose the form of investment best suited for you.
The maximum deductions that can be claimed in this area of investment is restricted to Rs. 25,000. However, an additional of Rs. 25,000 is subjected to income tax deductions too in case the employee takes up insurance for his parents (father/mother or both) if the insured is below 60 years of age. The deductions go up to Rs. 30,000 in case the insured is a senior citizen. Investment in medical insurance is one of the most popular and among the best ways to save tax.
The maximum restriction for deduction in case of transport allowance is Rs. 1,600 per month and Rs. 19,200 per year. Also, you can ask your employer to pay you food coupons as a part of your salary which is again a deductible from taxable income. You can receive food coupons of up to Rs. 55 per day for 22 days up to 2 meals a day. Therefore, the total that amounts at the end of the year, i.e., Rs. 26,400 may be what you gain in case you opt for this option.
You may collect medical bills of self or your dependents as well. The maximum limit up to which these expenses are subjected to tax deductions are Rs. 15,000 per annum. If you opt to go for a leave travel allowance, the following should be kept in mind:
A salaried employee can choose to go for any or more of the options mentioned above that are eligible for income tax deductions and are considered as the best ways to save tax. If you looking more info, Please download our apps: Policybazaar Apps Store
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