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Tax Saving Tips for Salaried Individuals-FY 2018-19

February 5, 2019

Tax Saving means that you pay a reduced amount of taxes,

  • either because of a particular type of investment income is taxed at a low rate or not at all,
  • or because only a portion of the investment income is taxable.

Planning of Tax is the most important part of Finance Planning for Tax Payers in India, especially for Individual and Salaried taxpayers.

Tax Saving Tips for Salaried Individuals

HRA Deduction for Rent Paid

House Rent Allowance is a component of the salary provided by the employer to his/her employee.

  • If you receive HRA as a part of your salary and you live in rented accommodation, then you can claim full or Partial HRA exemption u/s 10.
  • However, HRA is fully taxable if you don't live in rented accommodation.

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HRA Exemption Rules

HRA Exemption Rule

LTA Deduction for Travel Expenses

Leave Travel Allowance is a type of allowance which is given to an employee from his/her employer to cover his/her travel expenses.

  • LTA is another component of your salary which can fetch you tax benefits.
  • LTA concession can claim for 2 journeys in a block of 4 years.
  • Expenses incurred by you and your family on travel for which your employer gives LTA can claim as a deduction.
LTA Exemptions Rules

LTA Exemption Rules

Donations to Political Parties
  • You may not know this but supporting politics can also reduce the burden of your taxes.
  • Any donation made to political parties is exempt from tax if it satisfies certain conditions under Section 80GGC.
Tax Benefit on Gratuity

For Government employees, the entire amount they get is exempt from tax.

If you are not a Government employee but are covered under the Act, you get tax exemption for an amount that is the lower of the following:

  1. Actual gratuity received.
  2. 15 days Basic and DA for each completed year of service or part thereof in excess of 6 months.
  3. Rs. 20 lakh(Rs.10 lakh earlier)
Meal Coupons

Some employers provide meal coupons like Sodexo to their employees. These aren't taxable up to Rs.2,600 per month.

Medical Bills
  • It is beneficial to keep the receipts of medical expenses safely to save tax.
  • You can gain tax benefit of up to Rs.15,000 on medical expenses for yourself and your dependents.
  • This exemption is proposed to be replaced with the standard deduction of Rs.40,000 from FY 2018-19.
Daily Travel Allowance
  • Employees can also get tax benefits on conveyance up to Rs.1,600 per month from their employer.
  • One can save as much as Rs.19,200 per annum on tax through conveyance allowance.
  • Moreover, to claim this benefit one does not need to submit any bills or proofs.
  • Some companies have the policy of daily travel allowance if an employee is commuting by car or bike.
  • Employees can claim the benefit of submitting original fuel bills.
  • The limit of tax benefit depends upon the type and capacity of the vehicle.
  • This exemption is proposed to be replaced with the standard deduction of Rs.40,000 from FY 2018-19.
Car Leased by Employer
  • If someone is making use of a car lease policy offered by the employer, he/she can drive a car leased by his/her employer and therefore save tax on car EMI.
  • In this case, he/she cannot take the benefit of Daily Travel Allowance.
Expenses Related to Internet or Phone
  • Employees often get mobile phones and internet devices from their employer to do their jobs effectively.
  • Expenses incurred in using these devices are either pre-paid by the employers or can be reimbursed by the employees.
  • Tax benefits can claim on these expenses.
Money Under VRS
  • Public sector employees working under the Central or State Government can get this additional tax benefit.
  • When such employees take voluntary retirement, the money they receive as a result of VRS is non-taxable up to Rs.5 lakhs.

Common Tax Saving Expenses

Section Details

  1. Tuition Fees- u/s 80C
  2. Deduction on rent paid(without HRA)- Section 80GG
  3. Repayment of Home Loan- Section 24, 80C, 80EE
  4. Repayment of Education Loan - Section 80E
  5. Pension Funds- Section 80C/80CC/80CCD(1)/80CCD(1B)/80CCD(2)
  6. Medical Insurance & Health Check-up-Section 80D
  7. Charitable Donations - Section 80G
  8. Donations for Scientific research & rural development - Section 80GGA

Tax Saving Investments under Section 80C

  1. EPF
  2. PPF
  3. Sukanya Samriddhi Scheme'
  4. NPS
  5. 5 years post office time deposit account

More details for Income Tax

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