How to save tax on salary?

Hey friend,

How many times have you been disheartened because a chunk of your salary was spent on taxes? You aren’t the only one who has been through the situation. In an attempt to save the majority of my income, I learned how to save tax on salary. You should take a look at my answer to know all the tips and tricks. 

How to save income tax on salary?

You can follow one of the points given below :

 

Employee Provident Fund : One of the best ways to save tax is by getting a PF account. Employees’ Provident Fund and Miscellaneous Act, 1952 further helped salaried people save funds. You will get a fixed rate of interest on the amount you contribute.

 

Public Provident Fund : You can open a Public Provident Fund or PPF account. You can then invest money throughout the month. This scheme was introduced by the government. The maximum investment that can be made is capped at Rs. 1.5 lakh. The invested amount will not be taxed. Equity Linked Savings Scheme :

You can invest in a mutual fund scheme like ELSS. The investment you make under this scheme will be deducted under section 80C.

HRA : You can save tax on your salary if you live in rented accommodation. Under Section 10(13A), you will get certain tax concessions on HRA( House Rent Allowance).

 

A few other tips on how to save tax on salary are getting life insurance of your choice or the National Pension Scheme or NPS. This is all from my end. 

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Read more : How To Save Tax Apart From 80C?    how to save tax on home loan    How to save tax on sale of property?    

I suggest you should know how to save the tax on salary. If you are a salaried person with annual net pay of between Rs 5 lakh and Rs 15 lakh, you must first determine your current tax burden. You must prepare to save tax by taking advantage of tax deductions under the applicable provisions of the Income Tax Act once you have determined the amount of tax you must pay. You can invest in tax-saving choices, make charity contributions, take out a home loan, or request your employer to rearrange your compensation for maximum tax savings. Let’s see how to save tax on salary.

Guide on how to save income tax on salary:

1) Leave Travel Allowance (LTA)

You can use the LTA to get a trip exemption for travel within India. This exemption only applies to the smallest distance travelled during a trip. This can only be claimed for trips taken with your wife, children, and parents. As a result, you can claim this exemption after spending expenses and filing bills to your employers.

2) Provident Fund

The Provident Fund is a social security programme in which both the employer and the employee pay an equal amount to the employee's pension and provident fund on a monthly basis. This equates to 12% of the basic pay. The government sets the interest rate, which is now around 8.65%. As a result, the returns are tax-free when they reach maturity.

3) Professional Tax

The state levy of Rs 2,500 is known as professional tax. The employer deducts it and deposits it with the state government. As a result, it is permissible as a salary deduction.

4) Gratuity

A gratuity is a retirement incentive paid by an employer after an employee has worked for the company for five years. However, the money is paid when the employee retires or resigns.

5) Home Loan

Section 24 of the Income Tax Act allows you to claim a tax deduction for interest on a house loan of up to Rs 2,00,000 in a financial year. The loan must be used to buy, build, repair, renew, or rebuild the property. Furthermore, you can claim a tax deduction of up to Rs 1.5 lakhs for principal repayment under section 80C.

How to save tax on salary should be now clear to you.

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