Once an employee’s salary crosses the threshold limit, the employer deducts Tax Deducted at Source. The tax is deducted in accordance with Income Tax Laws. At the end of every financial year ending, employees must provide an ‘Income-tax declaration’ of their expenses incurred and investments made in the financial year gone by. Based on the report, taxes are deducted from the source.
A lot of money is deducted at the source and saving a percentage of that amount could be of great help to anyone who has a fixed salary. Believe it or not, certain ways can help you reduce your TDS on salary. In this article, we shall briefly go through those smart ways. Besides the following ways, you can also click here to save tax.
Interest on Residential Property Loan
If you are paying an EMI on a home loan, you are eligible to reduce your TDS on salary. The maximum amount that you can claim is not more than 1.5 lakhs. In order to claim this deduction, you’re not supposed to sell your property within 5 years of possession.
It is a great incentive for individuals to take their own home as it will make sure that some amount of your TDS on salary will go directly into an investment.
Leave Travel Allowance
Many companies offer LTA (Leave Travel Allowance) but if your employer does not, you can simply ask for it. Make an appeal for LTA in your salary breakdown to reduce your TDS on salary. According to the Income Tax Act, Leave Travel Allowance is a part of your total CTC.
As per section 80D, an employee can claim up to Rs. 25,000 deduction for medical premium. You can claim the money for a premium paid for yourself, your spouse, and your dependent children.
Employees can furnish a tax certificate from the respective insurance company that shows the premium paid along with bank statements and a passbook as proof of the payment.
House Rent Allowance
House rent allowance, just like your Travel Allowance can help in deducing the TDS on salary. To claim this allowance, you can simply present your particulars such as the address, name, landlord’s PAN, and deed of the rent. It is only applicable for people whose yearly rent exceeds 1 lakh. In case, the PAN of your landlord is not available, form no. 60 will also work.
It works great for people who live in a different city instead of their hometown, for service purposes. They can save some money on rent.
People often make donations to funds and institutions. Some do not even care to retain the receipts but it is wise to keep those. They can help you curb the amount of tax paid on your salary.
If you have contributed to authorized trusts, charitable institutions like the Prime Minister’s National Relief Fund, notified temples, National Defence Fund, etc., you can submit the proof of donation. Proofs could include legit receipts including all particulars like the PAN of trust, name, registration, address of the institution, name of the donor, and its validity.
National Pension System
If you have invested in the National Pension System, your employer is bound to deduce your TDS on salary. Submit a copy of your deposit receipt and a copy of the bank statement. You must submit the particulars before the beginning of a new financial year.
Public Provident Fund
The Public Provident Fund helps individuals in making small savings. This scheme offers a great rate of interest and provides good returns. You don’t need to pay any tax on the returns generated from the interest rates. According to Section 80C, you can claim a deduction if you have invested in this scheme.
These are small yet smart ways to save a part of our tax. Make sure that you pay attention to these small details as they can make a huge difference in your yearly income.