How to Save Income Tax on Income From Salary For Individuals

It is important for a salaried class person to understand the tax slabs and also have an understanding of what are the salary breakup components. There is taxation courses to help understand the person on how to save income tax on income from salary because when the tax filing season starts, it gets very difficult to know about the taxes they need to pay out in the financial year. Here you will get to know about the planning of the taxes and its categories and you will get the idea how you can save taxes through these categories. The taxation course includes categories and an explanation about Salary Restructuring and Investment in Tax saving devices. Salary Restructuring: There are many options available as per the income tax act by which you can save your taxes and those options are in the form of allowances, reimbursements, and other benefits. The salary can be restructured in a way that separates the benefits and reimbursements from the salary components and tax benefits can be availed in these. Below are the details of each: Basic salary: This is the major and fixed portion of your entire salary. For example, if any company is offering you 1 Lakh CTC then the entire amount won’t be in the form of a basic salary. As per the company norms there may be many components and by this allowance and components you can save your income tax House Rent allowance: If you are a salaried employee and living in the rented house, then you can claim this allowance by showing the rent receipts to the employer and you can get the Tax benefit on paying house rent. Uniform allowance: This benefit can only be availed if there is a uniform in your company or your employer is providing you the office uniform. You can get the reimbursements for the maintenance of employee uniforms. Leave Travel Allowance: Salaried employees can get the exemption for a trip within India and it can only be claimed if you are taking the trip with your parents, spouse and children and not with any other relative. Employees need to submit the actual bills to get the benefit of this allowance. Standard Deduction: With the 2018 budget, the standard deduction was reintroduced and conveyance allowance and the medical allowance has been replaced with this. An employee can reduce the outflow of tax by claiming this deduction form the total income. Investment in Tax saving Devices: This is another way in which you can save your taxes. There are many schemes which are listed by the income tax department and it can be found in income tax act. The main tax deductions include tax-saving mutual funds, medical insurance and insurance premiums. Public Provident Fund: This is a saving scheme established by the government and it is a 15 year investment to give a tax-free return. Employee Provident fund: It is a social initiative by the government and every month 12% is deducted from your salary towards provident fund. Employee Provident fund is a long term benefit to the employee and the company which has more than 20 employees provides this benefit as per the EPF Act, 1952. National Saving Certificate: It is a government scheme of 5 years with fixed rate of interest and it is a good scheme for those in lower tax slabs. Apart from these there are also many Retirement benefits which include the benefits in different categories. There are some retirement benefits to help you save from taxes and these benefits include the Exemption of Leave Encashment, Exemption on Receipts at the Time of Voluntary Retirement, Pension and gratuity benefits.