Income tax returns: Salaried Employees Alert! Know your right to these 6 tax benefits; save big on taxes you pay
Income tax returns: Taxes form a major part of outgo for any salaried employees. However, not everyone has to pay taxes and file for Income Tax Return (ITR), yet it can be said a majority of working class people are liable to pay taxes. To make tax compliance easier, the Income Tax Department has broken down taxpayers in various groups based on their income and source. For instance, any employee whose income is less than Rs 2.50 lakh, then they are not liable to pay taxes. On the other hand, if an employee’s income is between Rs 2.5 lakh to Rs 5 lakh, then 5% tax has to be paid, whereas if an employee’s salary is between Rs 5 lakh to Rs 10 lakh, then a hefty 20% is levied by the department.
Ramki Gaddipati, co-founder and CTO, Zeta said, “Taxes grow without rain. It’s one of the great certainties of life. At some point, employees start to pay attention to how much tax is being deducted from their income. When they do, they’ll probably realise that they are paying more than they should. The Government of India allows numerous exemptions and deductions under various sections of the Income Tax Act, 1961 to lower taxable income, and subsequently, an employee’s tax liability. If salaried employees are looking to save tax, here is a guide to help plan their taxes better.”
Here’s a list of six tax benefit that every employee who pays taxes must know. It will definitely help reduce the amount of taxes you paid. Let’s find out, as per Gaddipati.
House Rent Allowance: If employees live in a rented house, they can claim HRA (a component within salary) to lower their taxes. Subject to certain rules, it could either be partially or wholly tax-exempt. Otherwise, this allowance is fully taxable
Leave Travel Allowance: Employees can claim this reimbursement on expenses that they incur on travelling within the country. It includes air, rail and road travel. LTA can cover travel expenses they make towards their immediate family as well.
Telephone/Internet reimbursement: Employees can get 100% exemption against the actual bill amount. This is applicable only for postpaid connections. Traditionally, this benefit was available for employees who used their phone and internet for official purposes. Nowadays that’s almost everyone.
Fuel and Driver’s Salary Reimbursement: Employees who operate their own vehicles can claim monthly fuel costs up to Rs 1, 800 for a car with an engine capacity below 1.6 litres and Rs 2,400 if the capacity is over 1.6 litres. Driver’s salary is exempt up to Rs 900 per month
Meal Benefits: Meal vouchers can reduce taxable income by up to Rs 36,000 every year. These vouchers should be used only to buy food and non-alcoholic drinks.
Books & Periodicals: It’s quite common for some professionals to have to keep themselves updated with industry trends and practices. These employees can purchase books, newspapers, periodicals and other relevant literature and get reimbursed on the bills. The actual amount is fully tax exempt.
Hence, while chalking out the amount you have to pay under income tax returns, you need to make sure the above mentioned tax benefits are cleared first.
Be wise, save money as much as you can, but pay your taxes on time!
Date: 27/11/2018/ Source: Zee Business