Salaried individuals and taxes don’t always go hand-in-hand. But, it’s important for employees to understand that if they are feeling the tax burden, there are multiple ways to maximise their earnings by reducing their taxable salary.
Almost all employees are aware of the most common tax saving option of Section 80C that helps them to save Rs 1.5 lakh on their income. But, a majority of them are still oblivious to several other allowances and tax-saving options that can reduce their tax outgo.
Here is a list of five lesser-known tax-saving options that employees can avail of to save taxes.
1. Vehicle and fuel expenses for official purposes
Fuel allowance or car allowance is applicable for every employee who uses a company-owned personal vehicle for official purposes. This allowance lets you save tax on expenses incurred against fuel, car maintenance and your driver’s salary, too. If you diligently claim your reimbursements every month, you can save as much as Rs 11,000 in a year!
2. Books and periodicals
It’s quite common for professionals to keep themselves updated with industry trends and practices. That’s why the government offers books and periodicals allowance to all employees. Employees can purchase books, newspapers, periodicals and other relevant literature and get reimbursed on the bills. The actual amount is fully tax exempt.
3. Research study for professional growth
Employees who are planning to join an academic research programme outside of work are in for a win-win situation; as it entails your professional growth along with helping you claim research allowance. With the vision of encouraging academic research, training and other professional pursuits, this allowance is granted to employees. The expenses that are incurred at educational or research institutes are taken care of by the employer under this allowance and are tax-exempt.
4. Helper / assistant salary
Some employees are eligible to appoint a helper or assistant for the performance of their official duties. If you fall under this category, you can claim this allowance and save tax on the expenses incurred against the salary of a helper or assistant.
Your good work can also help you save taxes as under Section 80G donation to charitable organisations get up to 100% tax exemption. If you are making a donation to government funds like PM’s Relief Fund, CM’s Relief Fund, Earthquake Relief Fund and Flood Relief Fund, it has 100% deduction eligibility. If the donation is to an NGO, employees are qualified for a 50% deduction of the donated amount. So, if you donate Rs 10,000 you can claim a deduction of Rs 5,000 from your taxable income (50% of the donation amount) in one shot. This deduction applies to all donations, subject to certain limits.
A lot of times, employees incur expenses from their own pockets and have no knowledge that they can save taxes on them. Hence, it is imperative to be aware of these tax saving options that don’t fall under Section 80C and look beyond to explore offerings under Section 80G, Section 80D and more.
(By Ramki Gaddipati, co-founder & CTO, Zeta)