Income Tax Return (ITR) filing: 8 ways your employer can help you save money
When you seek or accept a job at a company, your first priority would be a handsome salary package. It is not just the take-home part you should look at. But thereafter, income tax return (ITR) filing should be the next big important factor.
Once again the time of paying income tax has arrived and many taxpayers are busy calculating claims that can be made under Income Tax Return (ITR) filing. While the government does takes taxes from your income and income from other sources, however, it also gives you the leeway to reduce those taxes by filing few forms and claim a certain sum on either be loans or investment. When you seek or accept a job at a company, your first priority would be a handsome salary package. It is not just the take-home part you should look at.
Archit Gupta, Founder & CEO of ClearTax says, “A lucrative CTC contains a reasonable in-hand as well as numerous tax-saving options. Yes, salaried taxpayers can claim numerous tax perks from their employers.”
Here is a list of benefits that can help you save maximum on taxes, as per Gupta:
1.Request for a tax-friendly salary structure
The optimal salary structuring differs across companies and employees. Some might need a higher HRA while people with their own home wouldn’t need one. You can request your HR to restructure the salary components based on your needs. Working out how these are structured can help you save taxes and invest for your future.
2. Leave Travel Allowance (LTA)
Employees are entitled to a certain number of paid and privileged leaves every year. Leave Travel Allowance (LTA) is an allowance provided by the employer to cover ticket fares while on leave. Section 10(5) of the Indian Income Tax Act allows you to claim a deduction of the same. You can claim them twice in a block of four years. However, please remember to keep and submit all your original tickets to the employer for availing this benefit. This has no monetary limit so to say, but the trip must be done within India. Also note that only the travelling fare is reimbursed, and not the expenses for stay or taxi commute etc.
3. Utilize the NPS benefits
Section 80CCD(2) allows you to claim a tax deduction on up to 10% of your basic salary – contributed by your employer. This is in addition to the deduction availed under 80CCC and 80CCD(1B) for NPS subscription.
4. Medical insurance – corporate cover by employer
Many companies pay the medical insurance premium on their employees’ behalf (monthly or as a one-time lump sum), if the employee opts to cover parents. This amount usually gets deducted from their salaries. You can claim the health insurance premium, deducted from your salary, under Section 80D of the Income Tax Act Please note that payment in cash mode is not eligible for this benefit.
5. Food coupons, vouchers etc.
Employers can provide employees with meal coupons or similar vouchers. It is essentially paper money they can utilize for office canteens, restaurant bill payments, grocery shopping etc. The amount deducted from the cash component of an employee’s salary is 100% tax-free. Coffee, tea and snacks and food bought with these coupons during work hours are non-taxable as long as the bill doesn’t exceed Rs 50 per meal.
6. Newspapers, books magazines, telecommunication bills etc.
In this time and age, having a relevant degree and experience alone are not enough to climb up the career ladder. It is important to keep oneself updated. You can claim tax deduction on money spent on newspapers, e-books, paid sites, books and journals.
Make sure you submit all the bills to your employer. Similarly, phone and data pack expenses can also be deducted to lower the tax outgo.
7. Standard Deduction of Rs. 50,000
The move of re-introducing Rs.40,000 Standard Deduction in Budget 2018 has come as a great respite for salaried individuals. This deduction has replaced the medical allowance of Rs.15,000 and transport allowance of Rs.19,200 which in turn has eliminated the need for hefty paperwork.
In Budget 2019, this limit is increased to Rs. 50,000 for the FY 2019-20 onwards.
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8. Submit investment proofs to your employer
You have to submit all the investment proofs directly to the employer. Please remember to submit the proofs on time so that the employer can adjust your TDS deduction accordingly. Otherwise, you will not have to wait for a refund after filing income tax returns.
Don’t worry if you have missed the deadline of proof submission, you can still claim the section 80 deductions while filing your tax returns for the FY 2018-19.