Ways to Save tax smartly if Salaried?

Below listed question will guide you to save tax in much smarter ways

Q1. Do you need a house? Does your employer offer Rent Free Accommodation or House Rent Allowance?

Then go for it, as the amount gets deducted from your total taxable income.

Q2. Does your company expect you to wear uniform at work?

If so, the expenses incurred on buying and maintenance the uniform will not be taxed.

Q3. Does your employer provide you with allowance for your children's education and hostel accommodation?

Then use it to claim exemption under section 10 (14).

Q4. Does your company provide you with a telephone facility in your home?

Then it is not taxed. However, be warned against taking telephone allowance, since it is totally taxable and will increase your taxable income.

Opt for the car facility, since the value of the perk is much lower than the actual expenditure incurred on the car.

Also try to restructure your salary in smarter way

1. We all have to visit the doctor at some point of time. So save tax by claiming medical reimbursements up to Rs15,000 per annum. But don't take any medical allowance, since it is completely taxable.
2. If your employer pays Fringe Benefit tax (FBT), then sum of fringe benefits, is tax-free for you. Also, if salary is paid in arrears or in advance, claim relief under section 89 (1).
3. Always ask your employer to include dearness allowance and dearness pay along with commissions earned in your salary. It will lower your tax liability on house rent allowance, gratuity and pension.
4. If you are eligible for a pension, always get it commuted, as commuted pension is tax-free for government employees and partially exempted for others. You can get tax relief under section 89(1).
5. If your current employer is participating in an authorized provident fund, and you change your employer within 5 years of joining the firm, ensure your new employer is also a member of the authorized provident firm. It will let you transfer the corpus in your provident fund to the new company without paying any tax. Also insist your employer fix his contribution to your provident fund to 12% of your salary, as it is the highest limit for tax exemption.
6. Plan your retirement or resignation at the start of the financial year in order to lower the tax on retirement benefits.
7. As leave travel concession is not taxed if certain criteria are fulfilled, try to claim this incentive to the highest possible level, without having to pay any tax.
8. Let us assume your annual salary is Rs 200,000. You get HRA of Rs 10,000 and your medical reimbursement is Rs 5,000. Your employer gives you an allowance of Rs 15,000 for your son's educational expenses. So instead of Rs 2,00,000 your total taxable salary now becomes Rs 170,000 (200,000 - 10,000 - 5,000 - 15,000). This will effectively reduce your tax liability.
9. Now that we have seen how to design your salary let us take a look at the most effective tax saving instruments available.

Source: Rediff