Tax Saving Options For Salaried Workers: How To Keep More Of Your Hard-Earned Money

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Xploringindia is a administrator who has a keen interest in politics, fashion, and lifestyle. She is a post-graduate in Economics and loves to listen to classic old Hindi songs and travel to new places in her leisure time. Her writing is well researched, covering important aspects and core of the topic covering crucial points.

As an Indian taxpayer, it is common knowledge that a significant portion (20-25%) of your income must be allocated towards taxes. However, it is important to understand that salaried employees are also eligible for deductions, exemptions, and allowances which can help in tax planning. By identifying and utilizing suitable financial instruments, salaried employees can potentially reduce their income tax liability. In fact, it is now possible for salaried individuals to plan their expenses in a tax-efficient manner and even achieve zero tax liability for salaries up to 30 lakhs – a first in India. It is crucial to comprehend these tax-saving strategies to avoid complications during the tax planning process.

Section 80GG Deductions: This tax-saving avenue is available to individuals who do not receive House Rental Allowance (HRA) from their employer. However, specific criteria must be met to qualify for this benefit. If you have not received HRA from your employer, you may claim this deduction under Section 80GG. This deduction can be claimed if you are renting a residence with your spouse and children, or if you own a property but are unable to claim deductions for it.

Also Read: 10 Best Savings Accounts In India In 2023 Offering Top Services

Gratuity: Employers often provide this benefit as a way to express appreciation for an employee’s many years of service. When an employee leaves an organization after working for a designated period, gratuity is paid out. The amount of gratuity is calculated based on factors such as the employee’s previous salary, basic dearness allowance (DA), and the duration of their service in the organization.

Medical Insurance: This tax-saving option has been added to the list of employee benefits since the 2018 budget announcement. The maximum amount that can be claimed under this option is INR 50,000, and there is no obligation to provide any supporting documentation.

Leave Encashment: Some employees do not use their allotted paid leaves, which can be carried forward to the following month. However, only a few organizations allow employees to encash their accumulated paid leaves. The amount paid by the employer to the employee for their unused leaves is known as leave encashment.

Food Allowance: Some organizations provide meal coupons or food allowances to their employees. The maximum amount that can be claimed for this benefit is INR 2,600 per month. Employees have the right to claim this deduction or benefit.

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