Most of us will wonder why there is such confusion about tax savings until we start working. However, the importance of effective tax planning becomes clear the moment when we receive our first paycheck and see the amount of tax that has been reduced.
However, many of us do not take advantage of all available employee benefits. As a taxpayer, you should be aware of your tax bracket as well as the various income tax deductions available to salaried workers. It will assist you in understanding how tax savings for salaried employees work and avoid complications that may arise during tax planning.
If you find the right financial instruments, you can reduce the amount of income tax payable by salaried employees. So, let us take a deep look into the tax-saving options available for salaried employees.
Conveyance Allowance
You can arrange for your salary to be structured in such a way that your employer will provide you with a transportation allowance. The company reimburses employees for car expenses like fuel, car maintenance, etc., incurred while performing official duties. When an employee owns a car, the income tax liability is based on the purpose of use: private, official, or both.
Reimbursement for Mobile
A taxpayer’s expenses for mobile and telephone use may be incurred. The income tax law allows an employee to claim employee benefits or tax-free reimbursement for expenses incurred. An employee may request reimbursement for either the actual bill amount paid, or the amount provided in the salary package, whichever is less.
Periodicals and Books
Employees spend money on books, newspapers, periodicals, and journals, among other things. An employee may claim tax-free reimbursement of expenses incurred under income tax law. Employee reimbursement is limited to the lesser of the bill amount or the amount provided in the salary package.
Meal Coupons
Many employers have included food coupons in their pay. This can be claimed once a month for all working days, which can help you to save tax up to Rs 42,000 per year. The employer provides a food allowance by either providing food during working hours or by issuing prepaid food vouchers or coupons.
Allowance for Travel
Tax on airfare for a trip within India is also known as LTA or Leave Travel Allowance. Your pay structure is determined by your employer, and it may or may not include LTA. An exemption on the LTA is the fare for the shortest distance between two points. It is permitted to take the shortest route from the starting point to the farthest point reached. In the case of air travel, the exemption should not be greater than the economy fare of Air India via the shortest route to the destination. This tax break is only available through your employer, so make sure to pay your LTA bills on time.
Bottom Line
The above-mentioned components help employees save money by providing tax-free ways to pay for things like accommodation, meal card, telecom, etc. Make the most of them by structuring your salary in such a way that your tax outgo is as low as possible.
If you want to make sure you make the best possible use of all the options available, head to the Zaggle SAVE. Provide the right benefits to your employees which helps them to save tax and boost your employee retention rates. Get Zaggle SAVE now!
