A salaried employee chooses diverse approaches and ways to save income tax. Most of the time, professionals merely stick to the ways they know and miss out on more effective conducts of saving tax. We have created this blog post to direct those salaried professionals who want to know more tax-saving options by precise investments in 2021.
Here are some of the significant tax-saving options for salaried staff
- ELSS Investment
ELSS stands for Equity Linked Savings Scheme and it primarily invests in equity and equity related securities of corporates. This scheme offers a deduction in the total income tax paid by the investors. The returns are much higher than most investment in ELSS.
- Standard Deduction
The utmost standard deduction amount is Rs. 40000.
- Leave Travel Allowance
The staff members can utilize this option to cover the tour ticket of spouse, parents, and kids. The siblings are covered under this option if they are reliant on the salaried employee. This scenario is included under section 10(5).
- While HRA is Salaries Integral Part
One needs to reside in a rented house to attain this option and should have specific receipts. This scenario is included under section 10(13).
- While HRA is Not Salaries Integral Part
Here one can enable the tax advantages with these approaches: A) Deduct rent amount from 10 percent of total income, B) a fixed rate of Rs. 5000/month, C) 1/4th of the income. All the deductions are covered under section 80GG.
- Voluntary Retirement Scheme
Professionals move away from employment and decide to opt for Voluntary Retirement, taking a pay-out. The Voluntary Retirement amount is non-taxable till the amount of Rs. 5 lakh.
- National Pension Scheme (NPS)
One can benefit from an added deduction if an employee invests its income in the NPS section of 80CCD (1B). The NPS is advantageous in two ways, one through the claim of an added deduction and even assist in planning for the retirement in the longer term.
- Health Insurance
One can use the paid health insurance policy premiums as deductions from taxable income under section 80D.
- Gratuity Amount
The funds received as gratuity is tax-free up to Rs. 20 lakh.
- Food Coupons
They are not taxable to a limit of Rs. 2600.
- Organization Leased Car
One can use the organization leased car to save tax amounts.
One can use the charges of an online connection and the phone for tax benefits.
- Other Options
One can claim a precise deduction on savings account interest earnings till Rs.10000 in a year. Investments in your new home, diverse insurance premiums, as well as ELSS investments, are the most accepted financial instruments for enabling tax deductions.
So, these tax-saving options would surely assist you in reducing your taxes by planning investments in 2021. Keep these suggestions handy, and try to diminish your overall tax liability with smart investment options.