5 simple tax saving tips for 2016
Are you paying too much money to the government? There are a few ways to reduce how much of your hard earned money you lose to taxes. It’s all a matter of doing the right tax planning. Here, we list ten such useful, yet simple tips to save tax. Remember everybody has a chance to save money on their taxes.
- Get you salary Restructured
In many cases, changing you salary structure can save you a lot of money on your taxes. Have a word with your boss, or HR personnel, about getting certain benefits, perks, & allowances included in your variable & CTC.
These perks, benefits & allowances should be of the non-taxable kind. They include expenses such as: Office Entertainment, Personality Development, Telephone and Mobile, Uniform, Medical Treatment, Conveyance, Books, Newspaper, magazines, etc.
- House Rent Allowance
There comes a time in your life, when you need to leave the nest. Either because you’re getting married, or because you got a job in a new city, or maybe because you just feel it’s time to live on your own. While you may cherish your new independence, you may not be able to enjoy it as lavishly as you expected because such a large chunk of your salary goes into rent. But don’t worry, as house rent is deducted from your taxable income as House Rent Allowance. Ask your boss to give you part of your salary in the form of HRA (House Rent Allowance)
However, remember to get a rent receipt from your land lord. You will need to submit copies of your lease contract, as well as a xerox of the landlord’s PAN card. Alternately, if you’re staying at home, you can always pay your parents rent, and get all the above formalities completed with them.
- Leave Travel Allowances and Medical Expense
If you give a genuine receipt for medical or work related travel expenses, this amount becomes tax-free. So, stop throwing those taxi receipts, and doctor’s bills, start saving them instead. However, do remember that this exemption is limited to Rs 15,000 per financial year.
- Invest to bring down your Taxable Income
Quite a few investments give allow you a much needed tax rebate. They’re generally under section 80C. The quantity of money that you invest is minused from your income before calculating your taxes. Also, a few investments such as PPF, have not only have the sum invested as tax free, but the interest, and maturity amount as well.
- Other incidentals Qualified for Tax Saving
In addition to the expenses enumerated above, there are other expenses that can save you some taxes such as:
- Tuition fees for children and your self
- Aegon life policy premiums
- Home loan principal payment