Today we are discussing on TAX SAVINGS TIPS FOR SALARY EMPLOYEE As a salary employee is working hard for the organization, at the end of the month TDS will be deducted from his salary. There are not much more benefits available to the salary employee as available in business. We are sharing with you few tips for Tax Savings for salary employee.
(I) Claim Reimbursements of expenses –
An salary employee can claim the following Reimbursement of expenses in his salary –
Identify the expenses incurred by you on JOB on behalf of the company. Like Telephone expenses, Fuel Expenses, Meal Expenses, medical expenses using of company car. If your company permits claim the reimbursement of Expenses for expenses incurred on behalf of the company on the basis of Actual bill produced to the company.
(II) Claim Allowances –
An salary employee can claim the following allowances in his salary –
(A) Conveyance Allowance – Claim Conveyance as a part of salary. Conveyance is exempt up to 800/- per months.
(B) Leave Travel Allowance – Claim Leave travel allowances for your holiday, two trips are allowed in a bloc of 4 year under income tax act, 1961.
(C) Medical Reimbursement – Claim Conveyance as a part of salary. By producing the medical bill to the HR Conveyance is exempt up to 15,000/- per months.
(D)House Rent Allowance – If you are leaving on Rent, you can take House rent allowance- Minimum of the following-
- Actual House Rent allowance received from the company
- Actual Rent paid to the landlord – 10% of basic salary
- 40% of basic salary (Non metro) 50% of basic salary for Metro.
(III) Home Loan-
Purchase your own home and get the loan from the bank. You can get the dual benefits of Interest and principal repayment of home loan.
Interest repayment up to Rs 2,00,000 per annuam if self occupied. Actual interest amount if let out.
(IV) Claim Deduction
A salary employee can claim all the deduction specified under chapter VI of income tax act, 1961. Some of the popular are as below –
(A) Section 80C
You can invest up to 1, 50,000 in any of the following –
Public provident fund
Bank fixed deposits (the 5 yr or more)
National Savings Certificate (NSC)
Equity Linked Saving Scheme
Tuition fees of your children
Equity linked savings scheme
Principal payment of home loan etc.
(B) Section 80D
Medical Insurance Premium – An salary employee can get the benefits of medical insurance upto Rs 15,000/- per annuam.
Interest on Educational Loan
(D) Section 80 G
Donation to Specified Trust is allowed under income tax act,1961.
(E) Section 80 GG
If you are not claiming House Rent allowance (HRA) you can claim the Rent paid to landlord in section 80GG.
(V) How to Save TDS (Tax deduction at source) deducted from salary every months?
TDS is deducted by the employer every month, to save the tds it is advisable to salary employee give all the available documents of deduction and allowance to the employer before the year end for saving TDS. Like Home loan certificate, Rent agreement, LIC premium receipt, Medical premium receipt, medical bill etc