tax saving scheme, this is the ‘panacea’ way to save tax for salaried class, know the eight formula – how to save income tax, 8 way for salary class to save tax
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If traveling by taxi for work, the entire amount can be withdrawn from the company without any tax liability. If you are traveling to work in your own car or if the car is provided by the company, you can claim a refund of fuel and maintenance expenses. If the vehicle is being used for its own use, then the taxable value of the expenditure is Rs 2,700 for cars with engine less than 1.6 liters and Rs 3,300 for bigger cars.
2. Driver Salary
The senior executive is also given the option of being a driver. The salary given to the driver has a taxable value of Rs 900 per month but it can save you a major portion of your tax.
3. Leave Travel Assistance (LTA)
Reimbursement of travel cost of your family during holidays is tax free if claimed twice in a period of four years. LTA has not been utilized to its full potential since last two years due to Covid related restrictions. But now that the travel restrictions have been lifted, it only makes sense to choose this big tax saver in your CTC. LTA should be made a part of CTC at the beginning of the year. You cannot opt for it later during the year or claim it while filing ITR.
4. Movable property
Big savings are possible if the company offers to buy movable property for its employees. Under section 17(2), gadgets and appliances purchased in the name of the company and given to the employee for personal use are taxed at only 10% of the value. There is no tax in case of computer.
5. Internet, Phone Bill
Internet and phone bills shot up during the Covid pandemic when people were working from home. No tax is required to be paid by the employee on the reimbursement of these expenses. But you have to submit the origin bill.
6. Newspaper, Magazine
Similarly, if the bills of newspapers and magazines are deposited, then no tax is to be paid on its reimbursement.
7. Meal Coupons
It is tax free up to Rs 50 per meal which works out to around Rs 2,200 a month. Despite this feature being present for many years, it has not been very widely used. But the introduction of digital wallets has made it easier for employees to use this allowance without having to foot the bill for every meal. Not only this, due to the digital wallet, compliance has become easier for the companies as well.
8. Contribution to NPS
This can significantly reduce taxes while building a retirement corpus. Up to 10% of the basic pay kept in NPS is tax free under section 80CCD(2). Yet, of those offered it, barely 10% of employees actually opt for it. There is also a fact that NPS is more economical than mutual funds in terms of cost and beats Provident Fund, PPF and other insurance plans in terms of returns. However, opting for NPS will reduce your take home salary as this money gets invested.
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