YOU WANT TO SAVE TAX ON YOUR SALARY BUT DO NOT KNOW, WHERE TO START?

YOU WANT TO SAVE TAX ON YOUR SALARY BUT DO NOT KNOW, WHERE TO START?

Let’s take a situation, where in you are working for the MNC(Multi National Companies)  in India. Salary is good and you get your salary on 30th of every month. Now, if you look at the salary slip there are deductions taking place. Some of the major component, where the salary is getting deducted consists of the following like:

  • Professional Tax
  • Employee Provident Fund
  • Tax Deducted At Source and so on.

Certain questions do come in your mind like are you paying excess taxes? Have you not done any proper tax planning? Do not panic, we would like to understand the way taxes can be saved on your hard earned salary in a logical manner.

Not to worry, Moneymindz is well equipped with personalized financial advisors, giving valuable advice in the field of tax planning.

Case Study: Mr.Raj is working in a MNC company and earning good salary. His salary is INR 25,000. Salary deduction would consist of professional taxes INR 200, tax deducted at source is INR 10,000 and the employee provident fund is INR 4800. He did not try to avoid taxes and hence faced lot of deductions.

Ways To Avoid The Taxes On Your Salary:

Salary Restructuring:

Doing an effective restructuring of salary is the major component. You must ask your manager/ finance team to restructure your salary in such manner that you receive good incentives.

Rent Payment:

In most of situations, company will offer accommodation to the employees. If it is not able to do, then you must find a good house for rentals. You need to deposit rent receipts to the finance team to avoid being taxed.

Leave Travel Allowances:

These expenses are removed from your salary and company gives part of salary as medical allowance. One can claim for LTA twice in a year. Please check these details with the HR department of your firm.

Public Provident Fund (PPF):

PPF is the major investment option introduced by government with reasonable interest rates/returns exempted from taxes. Investors can invest from INR 500 to INR 1, 50,000 in a financial year and get benefits like withdrawals, loans and others.

Life Insurance:

A unique contract with insurance company is life insurance policy.    It is influenced by the needs/goal of the policyholder. It offers protection for entire life of a person. Good to hear that death benefits from life insurance is absolutely tax free.

Unit Linked Insurance Plans (ULIP):

This offers unique coverage for policyholder with amazing investment options, to invest in mutual funds, stocks and bonds. The interesting features of ULIP deals with flexibility, transparency, tax related benefits as well.

5 Year Fixed Deposits:

Fixed deposit is a runaway hit among the Indians. Interest paid is quarterly/monthly and return on fixed deposit is very different from rate of interest. It is exempted from Section 80C of the Income Tax Act.

Equity Linked Savings Schemes (ELSS):

A unique fund, helping investors to get spectacular tax rebates under the Section 80C of the Income Tax Act. The main aspect of ELSS is that investor gets chance of investing in equity markets. Often fluctuates in market and there is no fixed returns. The lock in period of ELSS is three years.

Pension Plans:

Various pension plans available in India, helping a person to use a part of savings, offering steady income, after the retirement. One can receive pension monthly/quarterly or in a yearly fashion.

So, please do not allow your hard earned salary to come under the tax net.

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