ITR Filing: In the recent budget, Finance Minister Nirmala Sitharaman has given a big gift to the middle class by making the tax zero on income up to Rs 12 lakh. Under this, if your taxable income is up to Rs 16.5 lakh, then your tax liability will be zero.
ITR Filing: In the recent budget, Finance Minister Nirmala Sitharaman has given a big gift to the middle class by making the tax zero on income up to Rs 12 lakh. Under this, if your taxable income is up to Rs 16.5 lakh, then your tax liability will be zero. However, if you use every investment and reimbursement to the maximum extent, then it is possible that you can also get tax exemption on salary up to Rs 16.5 lakh. Let’s understand how this works.
First of all work on your salary structure
At the beginning of the year, there is often an option to change the salary structure. You can decide for yourself how much money you want as reimbursement and how much as taxable salary. Reimbursement includes options like conveyance, LTA, food-coupons or entertainment, internet or phone bills and petrol. HRA plays an important role in saving tax. Let us know how you can save your tax with the help of all these.
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Reduce your travel expenses with Leave Travel Allowance
You can avail this benefit twice in 4 years. Under this, you can go anywhere and get the benefit of Leave Travel Allowance on the fare for travelling. Usually, companies give about 10 percent of the basic salary as Leave Travel Allowance. Generally, 50 percent of the total CTC is the basic salary. If your total salary is Rs 16.5 lakh, then Rs 8.25 lakh will be your basic salary and in this case, you will get a Leave Travel Allowance of about Rs 82,500.
If you calculate the average on an annual basis, you will get tax exemption on about Rs 41,250. If Leave Travel Allowance is not included in your salary, then get it included, so that you can take advantage of it. Remember, if you fall in the 30 percent slab, then you can save a lot of money with the help of LTA. It would not be wrong to say that with the help of LTA, your travel tickets will be 30% cheaper.
Do take reimbursement
Many companies provide many things to their employees as reimbursement. Let’s know about all of them one by one and understand how much money you can save.
Conveyance reimbursement: Under this, you can usually get a reimbursement of about Rs 1-1.5 lakh from the company. Let’s assume that your company gives you a conveyance reimbursement of Rs 1.5 lakh, then this much money will become non-taxable for you.
Internet bill: Nowadays, almost every business needs internet broadband. You can get a good speed internet broadband for Rs 700-1000 per month. In such a situation, the company also gives almost the same amount in reimbursement. If this component is not there in your salary, then include it in the salary and get tax exemption. Let us assume that under this, you can make up to Rs 1000 per month, i.e., Rs 12,000 annually, non-taxable.
Food or entertainment reimbursement: Earlier this reimbursement used to be available in the form of food coupons, which you can now get by showing your food bill. Under this, the company usually gives around 2000 rupees per month i.e. 24 thousand rupees annually.
Uniform, fuel, books and others: Different companies also give some reimbursement in the name of uniform, fuel, books, magazines, papers etc. Talk to your company’s HR once and ask if these facilities are available there. If you get these reimbursements, you will be able to save tax on some more money. Generally, by combining all these, you can get a reimbursement of up to 3-4000 rupees. Let’s assume that you get a reimbursement of 3000 rupees per month, then also you will get the benefit of not paying tax on 36 thousand rupees annually.
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Take advantage of deductions too
In the new tax system, you also get some deductions under the Income Tax Act. Let’s know about them.
1- First of all, every salaried person gets a standard deduction of Rs 75,000. This means that whatever your salary is, just reduce it by Rs 75,000 without closing your eyes.
2- You can get tax exemption under 80CCD(2) by taking contribution to NPS through the employer. Employees of private and government companies can invest up to 14% of their basic salary in NPS in the new tax system. In this way, if your basic salary is Rs 8.25 lakh, then you can get tax exemption on 14% of it i.e. up to Rs 1,15,500.
Now understand the calculation
There are a total of 3 parts of this calculation. The first is of reimbursement. If you add all the reimbursements mentioned above, then you can get a total reimbursement of Rs 2.22 lakh. The second part is deduction, under which you will get a total deduction of Rs 1,90,500. Apart from this, the third part is Leave Travel Allowance, on which you can avail the benefit only twice in 4 years. So if you calculate the average on an annual basis, you will get tax exemption on about Rs 41,250. That is, a total of Rs 4,53,750 will not be taxed from your salary.
Your annual salary was Rs 16.5 lakh, out of which Rs 4,53,750 will not be taxed. In this way, your taxable salary is saved by Rs 11,96,250. In the new tax system, tax on taxable income up to Rs 12 lakh is zero. So in this way you will not have to pay any tax.
