7 tax saving tips every salaried employee must know

Shreya Dey (166 Points)

16 May 2017  

We work hard and get new career skills to achieve financial freedom but get disheartened to see our salary slips as it is riddled with tax deductions. Taxes often rejig the financial plans of salaried employees and force them to find ways of tax saving. But finding a way is easier said than done. Expert guidance is required to keep tax deductions to the minimum. Here we give a lowdown on how to save most of your salary from tax deductions.

 

Put section 80c to good use

Section 80C can prove a boon for salaried employees if used properly. The section has enough option to maximise your take home salary and lower tax deductions. Salaried employees can claim tax benefits for several expenses that include the premium of life insurance and school fees of their children.

If you have taken a home loan then it can help you save taxes. You can claim the deduction on repayment of principal amount of home loan under 80C.

Apart from that, there are certain investments that can save tax. The list of tax saving investments are as follows:

  • Contribution to EPF account
  • Deposit in PPF account
  • Investments in Equity Linked Saving Scheme (ELSS)
  • Sukanya Samriddhi Account
  • Tax Saving Fixed Deposit
  • National Saving Certificate (NSC)
  • Senior Citizen Saving Scheme

Give your family a medical insurance cover

Do you know protecting your family with a medical insurance cover can help save taxes? Getting a health insurance for yourself, your spouse and kids will enable you to claim a deduction of maximum Rs 25, 000 under 80D.  Add your parents to this cover and the limit increases to Rs 30,000.

Include Transport Allowance in salary

You may not have much say in this but if your employer includes transport allowance in your salary, then it can help you save taxes. Transport allowance up to Rs 1,600 is exempted from salary. Ask your employer to restructure your salary.

Rent paid can save taxes

Our job takes us to different cities and if the company doesn’t provide accommodation we need to rent out. The rent paid should be deducted from the taxable income. Employers give a certain part of your salary as House Rent Allowance (HRA). However, there are certain formulae for claiming HRAs.

LTAs and medical expenses could be tax savers

Some personal expenses are also exempted from the deduction. Leave travel allowances and medical expenses are prominent among them. So, if you have a habit of buying medicines without a bill, it is the right time you quit it. Start collecting medical bills of yourself and your dependents and produce it to get exemption up to Rs 15,000 in a financial year.

More than Blessings Charity also Save Taxes

Are you charitable by nature and don’t mind donating some money for the poor and those in grief? They say God helps those who help the poor. But income tax department also appreciates your effort by offering you tax relief under 80G. Donations made to the PM relief fund and notified NGOs can save taxes.

Education Loan Can Save Taxes
 

We are never too old for learning new things. Several professionals aspire to get enrolled in a course that can boost their career. They often take education loan to fulfil their dreams. If you have also taken educational loan for yourself or your spouse or your children, you can claim tax deduction under 80E.

With a good number of ways to save taxes, you might be wondering why you haven’t applied these to claim your tax.  Be smart with taxes, as the money saved is money earned.