Relaxation on Taxation: Best Ways To Save Tax
Everyone needs money for whatever reason they deem fit. Money is surely an important part of everyone’s life. People take up jobs, sometimes odd ones, just to earn money and live their life comfortably. While everyone is fixated on idea of earning money, some people also save money.
But with jobs, there comes taxes that you have to pay to the government. But what if I tell you that you can save taxes through some simple legit tricks? In this article I will tell you some ways in which you can save a lot of money by saving taxes through genuine ways.
1. Save on House Rent Allowance (HRA)
This is one of the easiest and the best way to save taxes on your salary. The first and foremost step is to check your salary slip for the splitting of Basic and HRA. Then compare your monthly rent, basic pay and HRA.
If you live in house that is yours, then request your employer to structure the salary in such a way that most of it is counted as basic pay and the rest little amount is treated as HRA. This will give you benefits that are associated with higher basic pay.
If your rent is more than HRA, then you should check if the HRA is 50% of your basic. If not, then request your employer to increase your HRA and decrease the basic pay. This will make your HRA 50% of your basic. This also implies if you pay your rent less than the HRA.
2. Using Tax Saving Investments
This is another great way to save tax. You should check your monthly PF deduction and then multiply that value by 12 to get the annual value of your PF deductions and check how much it is short of INR 1Lakh.
Then, you should start a systematic investment in tax-saving schemes such as Mutual Funds or any other scheme. You have to ensure that all your shortcomings are covered before 31st March. You can also bridge the gap of this shortfall by investing in INR20,000 in various bonds such as LIC, or you can invest in PPF but this is applicable if you are over 50 years of age.
Make sure that you provide all the details of the tax saving investments to your employer and get Form 16 from your employer in return which have the deductions under Chapter VI.
3. Travel/Hotel Expenses
Business owners ask their employers to travel to grow their business by meeting with clients. If you are travelling somewhere on behalf of your company, then you can file travel and hotel expenses as business expense in order to save taxes.
All the travel and hotel expenses are covered under the business expense and are not counted as taxable income. If you provide bills of the travel and hotel related expenses to your employer then you will not have to pay any extra taxes on your salary. This will help you save taxes.
4. Daily Travel Allowance
Travelling to work place is something that you cannot neglect and cannot avoid. You have to travel to your workplace daily and that can cost you a lot. You can avail tax benefits on conveyance up to INR1600 from your employer.
Since the travel allowance is not covered in your basic pay, tax benefits can be easily availed on daily travel. You can easily save up to INR19,200 per annum on your conveyance allowance. You don’t even need to submit any bills to avail this tax benefit.
Many companies and organizations have a policy of daily travel allowance for the employees who are travelling by their personal four-wheeler or two-wheeler. To avail this tax benefit, you will have to submit original fuel bills to the company.
5. Tax Savings from Home Loans
Your home loans can also help you save taxes and thus saving a lot of money in the long run. Not many people are aware of this little trick but once you are aware of it, you can save a lot of money on taxes.
The principal amount of the home loan can re-paid in the financial year. It is included under section 80C that offers a deduction of up to INR1,50,000.
The interest portion of the loan offers a deduction of up to INR2,00,000. This is covered separately under section 24. This helps in saving a lot of money on house taxes.
Saving money on taxes is very much legal and is possible. With some little tricks and tips, you can save a lot of money on taxes which in turn will help you to save you a lot of money. This article covers some basic and easy tips on saving taxes.
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