There are various salary components and the breakup is given to you by the organizations. These components can help us save tax some or other way if we know how to manage it. Apart from the investments that we make, there are other things which also help us save big on Income Tax. Let us see how to manage various items in order to get the easy rebate on the Income tax that we pay every fiscal.
Reimbursements – It is up to your employer to reimburse the expenses that has been incurred by you for the official purposes. Take for instance, you take cab from home to office and if your employee decides to reimburse that then it would save your tax. Similarly, phone bills can also be reimbursed by the employer. You might ask your employer to convert a portion of your salary as reimbursement. Government has ruled that a monthly reimbursement of Rs 2,000 would help you in saving tax of Rs 8,000 on annual basis for the individuals who come in the tax bracket of 30%. Reimbursement can for the part of Salary components and you can save tax.
Rent Vs own Home – You might have noticed HRA allowance in the salary breakup which is given as the part of the salary. The fixed HRA can save the tax that you are paying. In order to take the tax rebate, you should pay the rent and keep the receipt of the same. Further, the agreement made with the landlord should also be submitted as a proof that you are paying the rent on the house. If you own a house then the interest rate would be high. But at the same tome you can also get the rebate of 2 lakhs annually on the house.
Vacation – Another important part in the salary components is Leave travel allowance. You can claim LTA for spending the money on the ticket. However, the cost incurred for travelling via air or the railway can be claimed as LTA. If you are taking road trip in your personal vehicle, it cannot be claimed under Leave Travel Allowance. For claiming LTA on the air ticket, the price should not exceed the cost of the ticket on the national career for the same route. Also, the employee can make the claim only twice in a year.
Take for instance, you have planned trip to Shimla and the ticket for two is costing around 18000. So, if you fall in the 30% tax slab, then you can save 6000 on the travel. Further the LTA can only be claimed for travelling within India.
Food Coupons – There are various food coupon services that tie up with the organizations. Employees can take these food coupons and save on the taxes. Maximum exemption on food coupons is Rs 50 per day. You can ask the employer to issue these food coupons as the part of your salary for 22 days which would save 2200 per month and somewhere around Rs 7,920 annually.
