8 Simple Ways to Save Your Taxes

The following are the 8 Simple Ways of reducing your Taxes Liability

1) Proper Allocation of Annual compensation

Restructuring your salary with some additional components can reduce your tax outgo. For your can include the following exempt allowances and reimbursements in your salary to reduce your income tax liability.

-Transport allowance to the extent of Rs.800 per month (i.e. Rs. 9,600 p.a.) is exempt

-Medical expenses which are reimbursed by the employer are exempt up to Rs.15000 p.a.

-Food coupons like sodexo or ticket restaurant are exempt from tax up to Rs.28,800 p.a.

-Employees who are living in a rented accommodation can include House Rent Allowance (HRA) as a part of their salary

-Leave Travel Allowance (LTA) can be part of your salary as this can be claimed twice in a block of 4 years.

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2) Effective Utilization of Tax Exemption

As far as possible utilize the maximum exemptions available under section 80 C, and 80 D. The maximum exemption available under section 80 C is Rs. 100000.

Under this section Rs.100000 investment or contribution can be made in PPF, NSC, Life insurance premium, 5 year FD with banks and Post offices, Mutual Fund ELSS, Principal Repayment of housing loan, and the tuition fees paid for children's education.

Under Sec 80 D, the premium paid towards the mediclaim policies are exempt. The maximum limit of exemption is Rs.15000 and for senior citizens the limit is Rs.20000 and for covering senior citizen parents there is an additional exemption to the extent of Rs.15000.

Also Read: NRIs in US: Know About Tax Implications while Making Gifts