5 Tips To Salaried Persons For Tax Deduction
Normally the most of the tax payers don’t have knowledge about many available options for tax deduction, at the end of every financial year they desperately make investments to minimize taxes.There are so many incentives and allowances provide by income tax apart from the popular 80C. Following are some important tips to help you save more and reduce taxes:
1. Salary Restructuring: This is not easily possible, but if you are on good terms with your HR department, if your company permits, then restructuring a few components could reduce your tax liability.
(a) Include medical allowance, transport allowance, education allowance, uniform expenses, and telephone expenses as part of salary.Make bills of actual expenses incurred for these allowances to reduce tax.
(b) Option for food coupons instead of lunch allowances, as they are exempt from tax upto RS. 50 per meal
(c) Option for using the company car instead of your car, to reduce high prerequisite taxation.
2. Utilizing section 80C
You can utilize the section fully by investing in any of the available investment option. Secion 80C offers a maximum deduction of upto Rs. 1,00,000. Some options are:
(a) Public provident fund
(b) Life insurance premium
(c) National saving certificate
(d) Equity linked savings scheme
(e) 5 year fixed deposits with banks and post office
(f) Tuition fees paid for children’s education, up to a maximum of 2 children
3.Other options excluding Section 80C
There are another options available for deduction are section 80D and 80G
According to 80D, deduction of Rs. 15,000 for medical insurance of self, spouse and dependent children and Rs 20,000 for medical insurance of parents above 65 years are available.
According to Section 80G, deduction available on donations to specified funds or charitable institutions.
4. House Rent Allowance
If you paying rent and receiving HRA from your company then the following deductions are available
25 per cent of the total income or Rs. 2,000 per month or
Rs. 2,000 per month or
Excess of rent paid over 10 per cent of total income.
But notice that if your spouse or minor child owns a residential accommodation in the location where you reside or perform office duties these deductions will not be allowed.
The minimum of the following three is available if HRA forms part of your salary
The actual HRA received from your employer
The actual rent paid for the house, minus 10 per cent of your salary(this includes basic dearness allowance, if any)
For metro, 50 per cent of your basic salary, and for non metro 40 per cent of your basic salary.
5. Leave Travel Allowance
Use your leave travel allowance for your holidays, which is available twice in a block of four years.You could carry forward one journey to the succeeding block and claim it in the first calendar year of that block, If in case you have been unable to claim the benefit in a particular four- year block.