There is not much time left for the new financial year to start. In such a situation, it would be better to plan tax saving for the next financial year from now…
The new financial year i.e. financial year 2024-25 will start from April. Along with that, preparations for taxpayers regarding income tax will also begin. Although taxpayers still have time left to make tax saving plans for the current financial year, but experts always suggest that taxpayers should not wait for the last moment to make tax saving plans. Tax planning in advance helps you save maximum money.
Every time the time for tax saving starts before the start of the new financial year. Today we are telling you about some of the advantages of planning tax saving in advance. These methods are very useful for salaried taxpayers. If you also earn from salary, then these methods can help you in saving tax.
Many companies allow their employees to make changes in CTC i.e. Cost to Company at the beginning of the financial year. CTC is not the actual salary but is made up of many things, like basic pay, HRA, special allowance, variable pay, employer EPF contribution etc. Special allowance usually includes things like fuel and travel reimbursement, LTA, phone bill reimbursement. These things are provided as convenience to the employees, but they also save tax at the same time. Tax is calculated after deducting these expenses from the income, which reduces the taxable income and thus reduces the tax liability.
1: House Rent Allowance (HRA)
If you live on rent during your job, you can avail tax exemption. The condition for claiming HRA is that you are getting HRA from the employer and are paying rent for the house in which you are living. The calculation of exemption depends on three things… Actual amount received as HRA, 50% of basic salary+DA in case of metro city and 40% of basic+DA in case of non-metro city, less than the actual amount of rent. The amount that comes after deducting 10 percent of basic salary +DA. Tax exemption will be given on the amount which is less among these three.
2: Leave Travel Allowance (LTA)
The company provides leave travel allowance for you and your family to travel. The amount spent on plane, train or bus tickets for travel is exempt from tax. Other expenses incurred during travel do not come under its purview. LTA can be claimed twice in a block of four years. LTA benefit will not be available on foreign travel. Its maximum amount will be the lower of the actual expenditure on travel or the amount received from the employer.
3: Internet and phone bills
The culture of work from home has increased during Covid, due to which the use and expenditure of phone and internet has increased. On depositing income tax internet and phone bills, it provides the facility to exempt that amount from income tax. Tax will not be levied on the amount of rupees paid or the salary given under this head, whichever is less.
4: Food Coupons
You must be going for tea, water and food while working in the office. The company may give you food allowance during work or through pre-paid food vouchers/coupons. Under this, Rs 50 for one meal is tax-free. In this way, by using such coupons, salary of Rs 2,200 per month i.e. Rs 26,400 per year can be made tax-free.
5: Fuel and travel reimbursement
If you commute by taxi or cab for office work, then getting it reimbursed is tax-free. At the same time, if you are using your own car or a car given by the company, then you can get the payment for fuel and maintenance expenses tax-free.
6: Newspapers and magazines
Our elders advise us to read newspapers since childhood, but do you know that newspapers can also save taxes. Payments made for the purchase of books, newspapers and magazines are also tax-free, provided the original bill is attached. The bill amount or salary, which is less than the amount prescribed under this item, will remain out of the scope of tax.
