Personal Finance

How Can a Salaried Employee Save Tax in India?

How Can a Salaried Employee Save Tax in India?

As a traditional tax payer whenever we hear about saving tax, we think about investing some part of our income in LIC, KVP, NSC or PPF. There are better options available in the street so why limit restrict yourself.

Howdy salaried personnel, here are some tips to save tax without investing:

  • Saving Bank Interest

Interest on savings account is exempt up to an extent of Rs. 10,000. The exemption is not on per account basis therefore, you need to club interest received from all the accounts and then consider the limit.

  • Telephone Reimbursement:

Reimbursement of telephone, landline and broadband bills by employers are tax-free in the hands of employees. Check if you can take the benefit.

  • Medical Bills Reimbursement

Medical bills reimbursed by employer are tax-free to the extent of Rs. 15000 per annum. If you are a salaried employee contact your payroll team and check if you have this policy.

  • Meal Coupons

Meal coupons issued by employer up to Rs. 50 per meal is exempt from tax. You can ask your employer to restructure your salary accordingly

  • Leave travel allowance

If you love travelling and go for vacation once in and year or two then, this exemption is for you. You can claim reimbursement of travel tickets from your employer for two trips in a block of 4 years. This includes tickets of your spouse, dependent parents and children.

  • House Rent Allowance

Many employees receive HRA as part of their salary but very less knows about the tax exemptions available. If you are residing in a rented space then you can claim tax benefit on rent paid against HRA received from employer.

Minimum of the following three is available as exemption:

Actual HRA received from your employer or

Actual rent paid by you for the house, minus 10 per cent of your basic salary or

50 per cent of your basic salary (for a metro) or 40 per cent of your basic salary (for non-metro).

  • Transport Allowance:

An allowance of Rs. 1800 per month is tax-free in the hands of employees. Salary can always be restructured in the manner to reduce tax burden on employees.

  • Children’s Education Allowance:

Allowance paid to employee in this head is exempt upto Rs. 100 per child per month restricted to a limit of two children. Also, an additional sum of Rs. 300 per child per month is exempt if they are in hostel.

  • Car Travel Allowance:

If you travel by car to office then you can claim expense reimbursement.

Engine Capacity Tax exemption amount
<1.6 Litre 1800 per month
<1.6 litre + driver 1800+900 per month
>1.6 Litre 2400 per month
>1.6 litre + driver 2400+900 per month

These are some ways which can help you save some income tax. This is just a matter of restructuring your compensation. This also does not leads to any additional burden on employer except operational burden to validate bills of the expenses.

Save Tax

Many employers allow their employees to plan their compensation and save tax. We at PayTrics help employers in helping their employees save tax with zero burden on employers.

5 Comments

5 Comments

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