If You Are a Salaried Individual Then You Should Make Plan To Save Tax To Maximize Tax Saving, Tax saving and Tax Planning is one of the most important aspects for the salaried person. As it allows you to save more money. As a salaried person if you are earning Rs 10 Lac per year then you have very little scope to avoid tax. At the most you can invest in tax saving scheme and get a tax benefit of few thousand rupees.
You Are a Salaried Then You Should Make Plan To Save Tax.
In any case, you have to pay income taxes, but with little tax planning, you can optimize your tax outgo. Here are some Tax Saving Tips for a Salaried person to maximize tax saving.
Income Tax Exemption for Salaried Person:
As a salaried person the first thing that you should do is to take advantage of available tax exempted allowance/reimbursements. In order to take this benefit, you must be aware of such allowances. So, here is a detail of all applicable tax exempted allowances.
House Rent Allowance:
Most of the employer gives a benefit of HRA to their employees. Under House Rent allowance a minimum of a following is exempted from the income tax.
Actual Rent Paid minus 10% of salary
50% of Basic for Metro City or 40% of Basic for NonMetro City
Leave Travel Allowance:
You Are a Salaried Then You Should Make Plan To Save Tax. Leave Travel Allowance or LTA is given to the employee by the employer in order to reimburse the cost incurred on the vacation. This allowance is exempted from income of the salaried people provided employee actually goes on the vacation and produced the valid proof of travel. Two such trips in the block of four years are allowed under LTA. The amount payable should not exceed Economy Air Ticket or First class AC Rail Fare for the shortest distance to a single destination.
Travel and Fuel Reimbursement:
Travel and Fuel Reimbursement allowance is exempted from the tax up to some extent. Let us say if an employer provides you a car for the official purpose and employer also gives you fuel reimbursement you can avail tax exemption. You need to maintain the record that car is used for official purpose only. The maximum amount that can be exempted from tax via this allowance is Rs 2400 per month.
Children Education Allowance:
You Are a Salaried Then You Should Make Plan To Save Tax. Children education allowance is also exempted from the income tax. The amount of Rs. 1200 per year is exempted for maximum of two children.
Medical reimbursement is the amount which is paid to the employee by the employer on producing bills of medical treatment availed. The maximum amount of Rs. 15000 per year of medical bill is exempted from tax.
Transport allowance is given to meet the expense of traveling between your house and office. A maximum exemption limit for this allowance is Rs 1600 per month.
Income Tax Saving Investment/Deductions:
Salaried person can also make an investment in various tax saving instrument and maximize tax saving apart from tax exemption in various allowances. The list of various sections and tax saving investment option is given below.
Section 80 C:
Under section 80 C you can make an investment up to 1.5 Lac and avail tax benefit. Some of the best tax saving investment options under 80 C are ELSS, PF,PPF,SukanyaSmariddhi Scheme etc. You can also claim home loan principal and children’s school fees under this section.
Home Loan Interest:
If you have taken home loan, only then you can avail an additional benefit up to 2 Lac on the interest component of the home loan under section 24.
Section 80 E:
If you have taken education loan you can take benefit of income tax exemption on repayment of interest on the education loan. The amount paid for the interest on education loan can be claimed under this section.
Section 80 D Health Insurance:
Health Insurance premium can bring you additional tax saving of Rs. 25000 per year under section 80 D. it includes health insurance premium payment of self, family and parents. Along with this payment made for the preventive health checkup up to Rs 5000 can also be claimed as tax deduction.