7 Tax Saving Strategies for Salaried Individuals

Understanding Taxes

7 Tax Saving Strategies for Salaried Individuals

At the end of every financial year, many tax payers frantically make investments to minimize taxes, without adequate knowledge of the various available options. The Income Tax Act offers many more incentives and allowances, apart from the popular 80C, which could reduce tax liability substantially for the salaried individuals. Here are seven smart tips to help you save more and reduce taxes.

           

1. Salary Restructuring

Restructuring your salary may not always be possible. But if your company permits, or if you are on good terms with your HR department, restructuring a few components could reduce your tax liability.

• Opt for food coupons instead of lunch allowances, as they are exempt from tax up to Rs 60,000 p.a.
• Include medical allowance, transport allowance, education allowance, uniform expenses (if any), and telephone expenses as part of salary. Produce bills of actual expenses incurred for these allowances to reduce tax.
• Opt for the company car instead of using your own car, to reduce high prerequisite taxation.

  

2. Utilizing Section 80C

Section 80C offers a maximum deduction of up to Rs. 1, 00,000. Utilize this section to the fullest by investing in any of the available investment options. A few of the options are as follows.

• Public Provident Fund
• Life Insurance Premium
• National Savings Certificate
• Equity Linked Savings Scheme
• 5 year fixed deposits with banks and post office.
• Tuition fees paid for children's education, up to a maximum of 2 children.

3. Options beyond 80C

If you have exhausted your limit of one lakh under section 80C, here are a few more options.

• Section 80D – Deduction of Rs. 15,000 for medical insurance of self, spouse and dependent children and Rs. 20,000 for medical insurance of parents above 65 years.
• Section 80CCF- Deduction of Rs 20,000, in addition to the Rs 1 lakh under 80C, for investments in notified infrastructure bonds.
• Section 80G- Donations to specified funds or charitable institutions.

  

4. House Rent Allowance

Are you paying rent, yet not receiving any HRA from your company? The least of the following could be claimed under Section 80GG.

• 25% of the total income or,
• Rs 2,000 per month or,
• Excess of rent paid over 10% of total income
• This deduction will however not be allowed, if you, your spouse or minor child owns a residential accommodation in the location where you reside or perform office duties.
• If HRA forms part of your salary, then the minimum of the following three is available as exemption.
• The actual HRA received from your employer
• The actual rent paid by you for the house, minus 10% of your salary (this includes basic + dearness allowance, if any)
• 50% of your basic salary (for a metro) or 40% of your basic salary (for non-metro).

 

5. Tax Saving from Home Loans

Use your home loan efficiently to save more tax. The principal component of your loan, is included under Section 80c, offering a deduction up to Rs. 1, 00,000. The interest portion offers a deduction up to Rs. 1, 50,000 separately under Section 24.

 

6. Leave Travel Allowance

Use your Leave Travel Allowance for your holidays, which is available twice in a block of four years. In case you have been unable to claim the benefit in a particular 4 year block, you could now carry forward one journey to the succeeding block and claim it in the first calendar year of that block. Thus, you may be eligible for three exemptions in that block.

 

7. Tax on Bonus

A bonus from your employer is fully taxable in the year in which you receive it. However request your employer for the following.

• If you anticipate tax rates to be reduced or slabs to be modified in the subsequent year, see if you could push the bonus payment to the subsequent year.
• Produce your tax investment details well before, to prevent your employer from deducting tax on bonus before handing it over.

 

A Final Word

Keep in mind the below points, to avoid the hassles of last minute tax planning.

• Give your employer details loans and tax saving investments before hand, to prevent any excess deduction.
• Check the Form 16 received at the end of each year from your employer thoroughly.
• It is important to start your tax planning well before 31^st March, and to file your returns before the 31^st of July each year.

--------

-- 
"Imagination is more important than knowledge."
Albert Einstein
                      

"What you get by achieving your goals is not as important as what you become by achieving your goals."

Zig Ziglar

-- 

FIVE MINUTE MANAGEMENT COURSE

The Moral's are oh so true*   Lesson 1:  A man is getting into the shower just as his wife is finishing up her shower, when the doorbell rings.  The wife quickly wraps herself in a towel and runs downstairs. When she opens the door, there stands Bob, the next-door neighbour.  Before she says a word, Bob says, 'I'll give you $800 to drop that towel.'  After thinking for a moment, the woman drops her towel and stands naked in front of Bob, after a few seconds, Bob hands her $800 and leaves.  The woman wraps back up in the towel and goes back upstairs.  When she gets to the bathroom, her husband asks, 'Who was that?'  'It was Bob the next door neighbour,' she replies.  'Great,' the husband says, 'did he say anything about the $800 he owes me?'  Moral of the story:  If you share critical information pertaining to credit and risk with your shareholders in time, you may be in a position to prevent avoidable exposure.  Lesson 2 A priest offered a Nun a lift.  She got in and crossed her legs, forcing her gown to reveal a leg.  The priest nearly had an accident.  After controlling the car, he stealthily slid his hand up her leg.  The nun said, 'Father, remember Psalm 129?'  The priest removed his hand. But, changing gears, he let his hand slide up her leg again.  The nun once again said, 'Father, remember Psalm 129?'  The priest apologized 'Sorry sister but the flesh is weak.'  Arriving at the convent, the nun sighed heavily and went on her way.  On his arrival at the church, the priest rushed to look up Psalm 129. It said, 'Go forth and seek, further up, you will find glory.'  Moral of the story:  If you are not well informed in your job, you might miss a great opportunity.  Lesson 3 A sales rep, an administration clerk, and the manager are walking to lunch when they find an antique oil lamp.  They rub it and a Genie comes out.  The Genie says, 'I'll give each of you just one wish.'  'Me first! Me first!' says the admin clerk. 'I want to be in the Bahamas , driving a speedboat, without a care in the world.'  Puff! She's gone.  'Me next! Me next!' says the sales rep. 'I want to be in Hawaii , relaxing on the beach with my personal masseuse, an endless supply of Pina Coladas and the love of my life.'  Puff! He's gone.  'OK, you're up,' the Genie says to the manager.  The manager says, 'I want those two back in the office after lunch.'  Moral of the story:  Always let your boss have the first say.  Lesson 4  An eagle was sitting on a tree resting, doing nothing.  A small rabbit saw the eagle and asked him, 'Can I also sit like you and do nothing?'  The eagle answered: 'Sure, why not.'  So, the rabbit sat on the ground below the eagle and rested. All of a sudden, a fox appeared, jumped on the rabbit and ate it.  Moral of the story:  To be sitting and doing nothing, you must be sitting very, very high up.  Lesson 5 A turkey was chatting with a bull.  'I would love to be able to get to the top of that tree' sighed the turkey, 'but I haven't got the energy.'  'Well, why don't you nibble on some of my droppings?' replied the bull. They're packed with nutrients.'  The turkey pecked at a lump of dung, and found it actually gave him enough strength to reach the lowest branch of the tree.  The next day, after eating some more dung, he reached the second branch.  Finally after a fourth night, the turkey was proudly perched at the top of the tree.  He was promptly spotted by a farmer, who shot him out of the tree.  Moral of the story:  Bull Sh*t might get you to the top, but it won't keep you there..  Lesson 6 A little bird was flying south for the winter. It was so cold the bird froze and fell to the ground into a large field.  While he was lying there, a cow came by and dropped some dung on him.  As the frozen bird lay there in the pile of cow dung, he began to realize how warm he was.  The dung was actually thawing him out!  He lay there all warm and happy, and soon began to sing for joy.  A passing cat heard the bird singing and came to investigate.  Following the sound, the cat discovered the bird under the pile of cow dung, and promptly dug him out and ate him.  Morals of the story:  (1) Not everyone who sh*ts on you is your enemy.  (2) Not everyone who gets you out of sh*t is your  friend. (3) And when you're in deep sh*t, it's best to keep  your mouth shut!  THUS ENDS THE FIVE MINUTE MANAGEMENT COURSE

 

--
Regards,
Hemal Kansara

http://hemal.mp

--
Regards,
Hemal Kansara

http://hemal.mp

Point Book For Year - 2011

Health:
1. Drink plenty of water.
2. Eat breakfast like a king, lunch like a prince and dinner like a beggar.
3. Eat more foods that grow on trees and plants and eat less food that is manufactured in plants.
4. Live with the 3 E's -- Energy, Enthusiasm, and Empathy.
5. Make time to practice meditation, yoga, and prayer.
6. Play more games.
7. Read more books than you did in 2008.
8. Sit in silence for at least 10 minutes each day.
9. Sleep for 7 hours.
10. Take a 10-30 minutes walk every day. And while you walk, smile. 

Personality: 

11. Don't compare your life to others'. You have no idea what their journey is all about. 
12. Don't have negative thoughts or things you cannot control. Instead invest your energy in the positive present moment.
13. Don't over do. Keep your limits.
14. Don't take yourself so seriously. No one else does.
15. Don't waste your precious energy on gossip.
16. Dream more while you are awake.
17. Envy is a waste of time. You already have all you need.
18. Forget issues of the past. Don't remind your partner with his/her mistakes of the past. That will ruin your present happiness.
19. Life is too short to waste time hating anyone. Don't hate others.
20. Make peace with your past so it won't spoil the present.
21. No one is in charge of your happiness except you.
22. Realize that life is a school and you are here to learn. Problems are simply part of the curriculum that appear and fade away like algebra class but the lessons you learn will last a lifetime.
23. Smile and laugh more.
24. You don't have to win every argument. Agree to disagree. Society: 25. Call your family often.
26. Each day give something good to others.
27. Forgive everyone for everything.
28. Spend time with people over the age of 70 & under the age of 6.
29. Try to make at least three people smile each day.
30. What other people think of you is none of your business.
31. Your job won't take care of you when you are sick. Your friends will. Stay in touch.

 

Life:

32. Do the right thing!
33. Get rid of anything that isn't useful, beautiful or joyful.
34. GOD heals everything.
35. However good or bad a situation is, it will change.
36. No matter how you feel, get up, dress up and show up.
37. The best is yet to come.
38. When you awake alive in the morning, thank GOD for it.
39. Your Inner most is always happy. So, be happy.