Salary Income Plan 2021: Tax planning is one of the most important aspects of financial planning for those who are on salary income. However, many employees are not aware of the scope of tax-saving opportunities available to them
You may also, like- Automated Income Tax Revised Form 16 Part
A&B and Part B for the F.Y.2020-21 which can prepare One by One as per new
and the old tax regime
Tax planning is one of the most important aspects of financial planning for those who earn a living. However, many employees are not aware of the scope of tax-saving opportunities available to them. A number of industry experts online to find out what 10 employees should know to save taxes and make the most out of their salary.
Since Section 80C investments are the most popular, there are many other ways where an employee can save the maximum amount of taxes. Since a penny saved is a penny earned, the saving tax gives you more funds to invest and reaches your financial goals faster.
Some key points to earn the most from salary income
1. Invest in Employee Provident Fund (EPF): EPF is the most popular tax saving option for salaried individuals. Under this, both the employee and the employer contribute to the fund. On their contribution, the employee receives interest at a certain rate. Contributions made under this scheme are eligible for exemption under Section80. On the basis of uninterrupted service (not less than 5 years), EPF balance is duty-free for revoked employees.
You may also, like- Automated Income Tax Revised Form 16 PartB for the F.Y.2020-21 which can prepare One by One as per new and old tax regime
2. Deposit in PPF: is a unique tax-saving option U/s 80 C. In this regard, it can help in tax planning for salaried employees.
3. Understand taxable and non-taxable income: The first step to maximizing your tax benefits is to understand how taxable your income is. This is important because the government defines the non-income tax department. Therefore, before you start planning your tax, spend some time studying your Pay Slip. Get a clear idea of which departments your employer is paying you under and which of them are exempt from tax GetPelip usually carries all such information and shows you how taxable income was calculated. You can also ask your organization's HR team for help.
4. Claim Submission House Rent Allowance (HRA) Benefit: The government allows individuals to claim a tax deduction on the amount paid for rent for the places they live in. This means that if you claim this discount, the amount of rent will be deducted from your total taxable income, which reduces your tax liability.
You may also, like- Prepare at a time 50 Employees Revised Form 16 Part B forF.Y.2020-21 as per new and old tax regime
However, it is important to remember that there is a limit to the amount you can claim as HRA. This is usually specified on the payslip or the information is available from your organization's HR team. If you are a renter, this can be a great way to reduce your tax liability. However, to get this benefit, make sure you have all the documents related to your rent
5. Understand the different sections of the Income Tax Act that provide tax benefits: It is important to understand the different categories that provide toss benefits. The 80C section is quite popular among the people for tax-saving investment options. However, there are other categories like 80D, 80EE, 80G etc. which also offer tax benefits. It is important to maximize your tax benefits to understand all of these categories as it can help you create a tax-saving plan to reduce your tax amount.
6. Also offers some spending tax benefits: The government offers tax benefits on your child's pre-approved list like tuition fees, insurance premiums, grants from approved charities etc. So, it is important to make sure you are aware of all these discounts.
You may also, like- Prepare at a time 50 Employees Revised Form 16 Part A&B
for F.Y.2020-21 as per new and old tax regime
9. Leave Travel Allowance: (LTA) is often the first brush of tax savings for salaried individuals. The LTA gives salaried individuals the right to claim expenses for domestic leave. Note that this is mostly travelling expenses and travel time miscellaneous expenses LTA is available for two trips over a period of four years. There is also a provision to carry a trip if you are not able to claim the previous block.
10. Leave Encashment: Another way to save tax for salaried people is to Leave Encashment. Organizations (depending on whether they are private or state-owned) will compensate you for those days if you do not use the pages you own. The amount of money you receive is taxable.
