Tax Saving Avenues
It often happens that there is a large difference between your CTC and the take home salary. While it depends a lot on the salary structure offered by your company, there are avenues provided by the government that can be used to save income tax that you pay, thus increasing the amount you take home. We bring a few effective options that you can use to save that extra!
- Speak to your HR and restructure your salary to take full benefit of all allowances (like LTA, medical, telephone etc) permitted. These small savings on individual items can add up to quiet a large sum
- If you are living on rent, ensure you claim HRA benefits which makes the rent paid tax free*
- Interest earned on savings account upto 10,000 is tax free under Section 80TTA. Claim this exemption which filing for your returns
- Go beyond the popular section 80C (which allows benefits upto 1.5 lakhs), and utilize other avenues like 80D for medical insurance premiums & 80G for donations made to charity.
- Invest in NPS (National Pension System) which allows a benefit of upto 50,000 under section 80CCD which is over an above that offered in 80D
However, while planning for these investments, one must keep in mind that:
- Investments are made with the long-term financial goal in mind. Doing these just for the sake of saving tax may impact your financial planning
- Do not limit insurance cover you buy just to meet the tax requirement.
- Plan adequately for your needs to stay stress free
- Read the underlying conditions before investing. All tax saving instruments typically have lock in period and penalty on early withdrawal