Prepare at a time 100 employees Form 16 Part A&B for FY 2014-15 [Who are not able to download Form 16 Part B from the TRACES Portal,they can use this Form 16 Part A&B for FY 2014-15]
Do you feel that you are paying excess tax? Do you
think that you can save tax? Have you not done proper tax planning? Do you want
to know the ways of saving tax? We will learn the most useful tax saving method
in this post.
Indeed, you or anyone
else has the scope of saving tax. There are many ways which can cut your tax
outgo. Today I will tell you the 10
best tips of tax saving.
1. Save Tax Through Salary Restructuring
There may be many expenses which you are doing
because of your job. If you leave your job today, many of your expenses will
end. Such as you wear a uniform just for the sake of your job. You travel to
the office daily only for the job. You may be entertaining clients and spending
over them to fulfill your job. You must be reading certain newspapers,
magazines or books for your job purpose.
If you leave the job such expenses would end. It
means, these are forced expenses and your employer should pay for them.
Such expenses should go to the account of employer expense. Since you are
only medium of such expense this should not be part of the income.
Talk to your employer and ask to restructure your
pay. You should get perks and allowances for such expense. This should not be
part of your salary.
These perks and allowances or non taxable if incurred
actually. However, you need to give proof of these expenses to avail tax-free
allowances.
Some Allowances Which Save Tax
· Conveyance
· Driver
· Newspaper, Books
and Magazine
· Medical
Treatment
· Uniform Allowances
· Telephone and Mobile
· Personality
Development
· Office
Entertainment
However, these allowances are given according to the
grade. You can’t ask all of them. Your employer will decide the eligibility of
allowances. You can only demand.
2. Save Tax On Rent Payment U/s 10(13A) Click to Download HRA Calculator U/s 10(13A)
We get a job in a different city or place. We go
there to do our job. If the company does not give us accommodation we have to
rent out. We live in rented house because of our job. Therefore, expense of
rent should be deducted from the taxable income.
Employers do give some part of your remuneration as
House Rent Allowance (HRA). You subtract this HRA from your gross income.
However, you cannot take full benefit of HRA for tax saving. There is a formula
for the HRA tax benefit.
You can deduct the lowest of these from gross income.
· Actual HRA given
by the employer
· 50% of the basic
salary plus DA if the employee is situated in Delhi
· Actual house
rent paid by you, minus 10% of basic salary+DA.
HRA gives you big tax saving. Ask your employer to
keep the provision of HRA in your salary structure.
Also, Don’t forget to take rent receipts from your
house owner. If your total rent of a financial year exceeds 1 lakh then you
need to give copies of registered lease agreement and copy of the homeowner’s
PAN card.
You can also give the rent to
your parents. But you have to
complete all the formalities of lease as stated above.
3. Leave Travel Allowances and Medical Expense U/s 80D
Click to download Master of Form 16 Part B for Govt & Non Govt employees for FY 2014-15 [ This Excel Utility can prepare at a time 50 employees Form 16 Part B for AY 2015-16]
Some personal expenses are also eligible for
exemptions. These Expenses are deducted from your gross salary. Your employer
may give you part of your salary as medical allowance. Check with the HR
department.
If you produce an actual bill of medical expenses,
this allowance becomes tax-free. So, Start collecting medical bills. However,
it is limited to Rs 15,000 in a financial year. You can give receipts of
medical expense of your dependents as well.
Your employer can give you leave travel allowance as well. You are entitled to tax-free leave travel allowances,U/s 10
· It is also
limited to two times in a block of 4 years.
· The travel
should occur while you are on the leave.
· It should be
within India
· Travel should be
from the shortest route.
· You can claim
the maximum for AC-I of the train journey and economy class of air travel.
4. Invest And Reduce Taxable Income,U/s 80C[ Click to view details of deduction U/s 80C]
Certain investments
give your tax rebate. These investments come under section 80C of deductions.
The amount invested is deducted from your taxable income. Many of such
investments come under EEE category. It means you need not to give tax at
the time of investment, earning and redemption. However, There is a
maximum limit for 80C deductions. It has become 1.5 lakhs after the budget
of 2014.
List of Investments Which Saves Tax
· Contribution
to EPF account · Deposit
in PPF account · Investments
in tax saving mutual funds i. e. Equity Linked Saving Scheme (ELSS) · Deposit
in tax saving FD · Investment
in National Saving Certificate (NSC) · Deposit
into Senior
Citizen Saving Scheme
There are some expenses which also give a deduction for tax
saving. I have listed here only investments.
Download Automatic Form 16 Part A&B and Part B for FY 2014-15 [ This Excel utility can prepare One by One Form 16 Part A&B and Part B for AY 2015-16]
5. Expenses Eligible For Tax Saving
Under the limit of 1.5 lakh deduction there are
some expenses as well.
· Tuition
fees for self and children
· Insurance
scheme premium
· Home
loan principal payment- Home
loan EMI has two-part, principal and interest. Principal part gives tax saving
benefit under section 80C.
These expenses and above mentioned investment in
aggregate should not exceed 1.5 lakh limit.
6. Medical Insurance Deduction,U/s 80D
Medical Insurance
expense gives you the deduction, over and above the 1.5 lakh limit. You
can save tax for the health insurance premium of your family and dependent
parents. Also, health checkup can also give you tax saving. You can deduce
these expenses from your total taxable income.
· Up to Rs 15,000
for the health insurance of self and family. You can also include health
checkups of up to Rs 5,000 within this limit.
· Up to Rs 15,000
for the health insurance of parents. If they are above 60 years, This limit
goes up to 20,000.
Click here to Download Master of Form 16 Part B for FY 2014-15 [ This Excel Utility Can prepare at a time 100 employees Form 16 Part B for FY 2014-15]
7. Enjoy Tax Benefit On Home Loan Interest
Payment U/s 24B
Home loan interest
payment enjoys separate tax saving. The limit of deduction for home loan interest
payment is increased to 2.0 lakhs U/s 24B in
the first Modified budget. This deduction can give you a very big tax saving.
However, the loan amount should be big to get the full benefit.
