5 tax saving options that may help reduce your income tax to zero
In the old tax regime, you have plenty of options to save tax. While you can save tax up to Rs 1.50 lakh on deposits under Section 80C of the Income Tax Act, you can also save tax through the HRA, entertainment, transport and internet allowances.
Tax Saving Tips: If you are in the old tax regime, you have a lot of options to save tax. You can get tax relaxation of up to Rs 1.50 lakh on deposits under Section 80C of the Income Tax. NPS Tier-1 account holders can get a further Rs 50,000 tax exemption. Additionally, salaried employees get standard tax deductions on their taxable income. However, apart from these options, there are other options such as house rent allowance (HRA), food coupons and internet bills that may help you reduce your income tax to zero.
Here are the five tax saving options that can help you reduce your income tax to zero.
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House Rent Allowance
House Rent Allowance
House Rent Allowance is an effective tool to reduce your income tax. Your HRA is based on the city you reside. If you live in a metro city, you are entitled to HRA 50% of your basic salary. It will reduce you taxable income hugely.
Food Coupons or Entertainment Allowance
Food Coupons or Entertainment Allowance
This is the part of your CTC that you get as reimbursement. However, some of the companies might not have the provision of food coupons and entertainment allowances. But you can talk to your HR at the time of joining the organisation. To avail tax benefits, you need to produce original bills, where have already paid the tax in the form of GST, etc.
Transport allowance
Transport allowance
A lot of companies provide transportation expenses to their employees to and from office. You get this money from your company in the form of reimbursement. This may also be a substantial amount. In a year, this may also help you save tax a great deal.
Uniform and book allowance
Uniform and book allowance
A lot of companies provide uniform and book/newspaper allowances to their employees. To get this allowance, you need to produce original bills to the company. By paying these bills, your income can be tax free up to a certain limit.
Internet allowance
Internet allowance
Earlier, companies used to provide mobile phone bill allowance to their employees. But in the last few years, specially from the time of the COVID-19 pandemic, a lot of companies provide internet allownace to the employees. Since employees do work from home for their companies, they get internet reimbursement. This is the part of CTC and one gets tax relaxation on internet bills.