31st March is fast approaching and this is the time for every salaried person to think about-How to save tax on salary ?
Saving tax on salary is something that every salaried individual wants to do. However, many people are unaware of the various tax-saving options that are available to them. In India, there are several laws and provisions that allow individuals to save tax on their salary. In this article, we will discuss some of the ways through which you can save tax on your salary.
- Invest in Tax-saving Instruments One of the best ways to save tax on your salary is by investing in tax-saving instruments. The government of India has provided several options for individuals to invest in such instruments, which not only help in saving tax but also offer good returns. Some of the popular tax-saving instruments are Public Provident Fund (PPF), Equity Linked Savings Scheme (ELSS), National Pension Scheme (NPS), and tax-saving fixed deposits.
- Claim HRA If you are living in a rented accommodation, then you can claim House Rent Allowance (HRA) to save tax. HRA is a component of your salary that is provided by your employer to cover your rent expenses. You can claim a deduction on the HRA amount that you receive, provided you are paying rent for the accommodation.
- Claim LTA If your employer provides you with Leave Travel Allowance (LTA), then you can claim a deduction on the amount that you receive. LTA is a component of your salary that is provided by your employer to cover your travel expenses when you take a vacation. You can claim a deduction on the LTA amount that you receive twice in a block of four years.
- Medical Reimbursement Your employer may also provide you with medical reimbursement as a component of your salary. You can claim a deduction on the amount that you receive, provided you submit the bills for medical expenses incurred by you or your family members.
- Interest on Home Loan : Under section 24 of the Income Tax Act, you can claim the interest paid on your home loan upto Rs.2 lakh per annum as deduction from your taxable salary income. It is important to note that your claim your entire amount of Home Loan EMI as a deduction from your taxable salary income. For example if you are paying EMI of Rs. 350000 per year, then out of this total EMI amount, if there is interest portion of Rs. 200000 and principal repayment portion is Rs.150000, then you can claim interest of Rs.200000 under section 24 and principal amount of loan repayment under section 80C of the Income Tax Act.
6. Plan your salary structure: Your salary structure can have a significant impact on your tax liability. You can work with your employer to structure your salary in a way that maximizes tax benefits. For example, you can ask for reimbursements for expenses such as telephone bills, internet bills, and books related to your profession. These reimbursements are tax-free.
Conclusion : In the above article, we have given sufficient tips about how to save tax on salary. If you follow all these tips and methods then you will be able to save maximum tax on your salary.
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