Education Loan
The first and most important thing is to claim tax relief on the interest paid on an education loan. Suppose you took a loan from any financial institution or bank. You can take it for yourself or any of your relatives. Here the term 'relative' implies your spouse and children for whom you're the legal guardian. Now, you're paying regular EMIs with interest. In this situation, you may get tax relief under Section 80E as the interest paid on educational loans is eligible for tax deduction
Starting from the first repayment, you can get tax relief on interest paid for the next seven financial years or till the financial year you'll pay your last EMI, whichever is shorter. So, you can say that there is tax relief on interest paid for a maximum of 8 financial years.
House Rent Allowance (HRA)
Many youngsters live in rented houses/flats/apartments.You can claim this exemption through the employer, in your form 16. In case the employee is unable to claim the same through the employer, claim HRA by filing your tax returns. If an employee is not getting HRA but they are paying Rent then they can claim deduction under section 80GG to reduce their tax outgo by filing a 10BA Form that holds information related to their rent payment details. Please note that HRA and deduction under section 80GG cannot be claimed simultaneously.
Leave Travel Allowance (LTA)
Beginning-level employees must not be aware of Leave Travel Allowance (LTA) their companies/employers give to them. But they should know how beneficial LTA is for first-job tax saving. It lets you enjoy your vacations with your families without thinking about the travel expenses. It includes the expenses incurred by you and your spouse, children, and parents.
Furthermore, LTA is the travel allowance that makes you carefree. You can claim tax exemption under Section 10(5); this exemption is available for the utmost two short trips within India in the time span of four calendar years. Simply, make sure you are putting all the bills in place and keep track of your travel allowances.
Professional Tax
Under Section 16(iii), a professional tax is a tax levied on salaried persons by the state government. It varies from one state to another and is up to Rs 2,500 per annum. A deduction from salary can be claimed by the taxpayer on account of professional tax paid. The deduction for professional tax will be allowed in the year in which the tax is actually paid by the employee. It’s not mandatory that all states levy this tax. Some states even don't levy it, whereas some, like Andhra Pradesh, Karnataka, Madhya Pradesh, Telangana, West Bengal, Maharashtra, etc., levy this tax. The employers or companies deduct this tax from your salary and deposit it to the state governments, which allows P-Tax.
Exemption of Leave Encashment
It is pretty sure that many of you never heard about the 'Leave Encashment Exemption'. Several companies offer carry-forward leaves to their employees. But, many times, employees don't use them. In this condition, you can encash them at the time when you'll leave the company. The Government of India set a maximum limit of Rs 3 Lakhs for leave encashment. You can fill out Form 10E to get your leave encashment amount under section 89. However, these paid leave policies are different from company to company. You need to contact your company's HR to know it in detail.
PF Contribution
PF contribution will remain at the top in the 10 best first job tax-saving tips for salaried employees. It has a 15-year-long lock-in period. Therefore, it is a long-term investment plan offered by the government of India. It is a good option for employees who are less interested in carrying risks associated with ELSS. Additionally, it offers complete capital protection to its users. An individual can avail of up to 1.5 lakh tax exemption under section 80C.
Standard Deduction
Do you know a portion of your annual gross income is tax-free?Standard deduction is allowed under section 16(ia) of the Income Tax Act. From FY 2019-20 a deduction of Rs 50000/- is allowed to all salaried individuals without submission of any proof. The IRS or Internal Revenue Service allows employees to reduce their tax bills. Use Form 1040 to evaluate your total payable income and qualify for the standard deduction of ₹ 50,000 under section 16(ia) will be Rs 50,000.for a financial year Consult our Tax Experts to avail of it now.
Meal Coupons
Sodexo or Zeta are some popular meal coupons that employers may provide to their employees. If you are also one of those employees, then there is big news for you. Such meal coupons allow tax benefits of up to ₹ 50 per meal. Additionally, it is permitted on two meal counts for a day. Hence, if you are working for 22 days a month, you may reduce ₹ 2,200 from your expenses on meals. Consequently, up to ₹ 2,200, it is tax-free.
In addition to your salary, your company may reimburse you for the additional expenses incurred for your mobile/phone and internet bills. You may claim 100% of a tax deduction on the telephone reimbursement under Rule 3(7)(ix) in the Income Tax Act. Although there is no thumb rule, telephone and internet reimbursement offered by companies may vary depending on the job profile and the particular department. But you should give it a try!
Health Insurance
There is a plethora of tax-saving schemes available. But Health Insurance/medical insurance is one that every salaried person must buy. It covers unexpected medical expenses and hospital bills. It serves tax benefits under section 80D of the Income Tax act 1961. You may claim up to ₹50,000 (i.e., 25,000 for self and 25,000 for your parents, 50,000 if parents are senior citizens) exemption under Section 80D. You can easily entitle yourself to up to ₹ 5,000 tax deductions for preventative health check-ups per year. Also, this amount can be spent in cash.
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