Some of the Tax Tips for Salary Earners :

Some of the Tax tips for salary earners

The main aim of tax planning is to reduce the incidence of income tax on you. This becomes imperative if you are the sole earning member of your family.
Reducing Your Tax Liability
Being salaried, you can reduce the incidence of tax in two steps: Firstly, by structuring your salary in a manner that will enable you to optimally utilise all the deductions related to it.
Secondly, by making investments/payments in pre-determined avenues which offer a deduction from the total taxable income, to the extent of the investment /payment made, subject to the maximum permissible limit.
STEP 1
Minimising The Tax Liability On Your Salary Income
Here’s taking a look at the various components of your salary and the tax exemptions attached to them...

House Rent Allowance (HRA)

If you stay in a rented house and receive HRA from your employer, you can claim a tax exemption to the extent of the least of the following three: 50 per cent of your salary, if your house is situated at Mumbai, Calcutta, Delhi or Madras and 40 per cent, if it is in any other place or Actual HRA received or Rent paid less 10 per cent of the salary. Alternatively, if you are staying in your own house and you have taken a loan from a financial institution, on or after April 1, 1999, for the purpose of construction /acquisition of the house, then you can claim a deduction of up to Rs 1.5 lakh per annum from your total taxable income. If, however, you have taken the loan prior to April 1, 1999, then the deduction available is only Rs 30,000. employer (in the form of ticket restaurant coupons, etc.) do not attract tax.

Medical Reimbursement

You are eligible for a deduction of up to Rs 15,000 in the form of “medical reimbursements ” from your employer. However, in order to claim this benefit, you must produce proper vouchers, such as medical bills, certificates from your doctor, etc.

Leave Travel Allowance (LTA)

If the entire amount available under LTA is actually incurred for travel for two journeys which are undertaken in a block of four calendar years, the entire LTA component does not attract tax. However, if only a partial amount is utilised, then the balance (i.e. the LTA available less the actual expenses) will attract tax.

STEP 2

Availing Of Provisions Under Section 80
Under Section 80 of the IT Act, you can claim tax deduction from your total taxable income to the extent of the investment/payment made in certain pre-determined avenues. Here’s taking a look at some of them...

Section 80C:
This section allows you to claim a 100 per cent deduction from taxable income for any investment in or purchases of certain specified instruments up to a consolidated amount

Cash Vouchers

Non- refundable cash vouchers such as free meals provided by your of Rs 1 lakh per financial year. Some popular instruments allowed as deductions under this section include premiums paid for servicing life insurance policies, equity linked savings schemes of mutual funds, PPF and fixed deposits held with scheduled banks for a term of 5 years or more.

Section 80CCC:

This section offers a tax benefit on the servicing of pensions plans. As per the last union budget, the ceiling fixed for such deductions is Rs 1 lakh. However, there is a condition that the total deduction available to you under sections 80C, 80CCC and 80CCD (i.e. deduction in respect of contribution to pension schemes of the central government) are restricted to an aggregate of Rs 1 lakh.

Section 80D:

As per this section, premium paid towards servicing of health insurance can be deducted from your taxable income. However, this section comes with a ceiling of Rs 10,000 (Rs. 15,000 for senior citizens).

Section 80DD:

This section allows you to claim a deduction from your taxable income for expenses incurred for the medical treatment, training and rehabilitation of a dependant who has severe or ordinary disability. The benefit can be extended to specified amounts deposited in schemes framed by LIC, UTI and other identified institutions for the benefit of such dependants. Section 80DDB:
Under this section, deduction for expenses that you incur on the medical treatment of certain specified ailments is available to the extent of Rs 40,000. For senior citizens, the limit for the deduction is raised to Rs 60,000. However, if you receive any reimbursement for these medical expenses from an insurer or your employer, you have to reduce the reimbursement amount while arriving at the final deduction applicable under this section to you.

Section 80E:

This section allows you to claim a deduction for interest on loans taken for pursing higher education .
Section 80G:

Any sum that you have paid in the current financial year as donations to certain specified funds, charitable institutions, etc., can be deducted from your taxable income.

Hope this Would Help you to Save your Moner Legally. :-)