How To Save Tax On Salary Income: Proven Methods in Upcoming Webinar

It is the time to file the ITR-2024, right? As per the government rule or Income Tax Department – there are some rules regulations in tax management. Being professional you should know what is income tax, how to save tax on salary income or other , what are the tax saving schemes in India and many more.

Here is the blog on topic – how to tax save from salary, you need to read and apply in future.

What Is Tax On Salary Income?

Tax on salary income is a important component of personal finance that every salaried individual needs to understand thoroughly. The Tax includes various elements such as basic salary, allowances, perquisites, and bonuses, all of which are taxed differently under the Income Tax Act.

Knowing the intricacies of salary taxation helps in better financial planning and ensures compliance with tax regulations. Moreover, a deep understanding of income tax saving on salary income allows individuals to leverage various exemptions and deductions, thereby reducing their tax liability and maximizing their net earnings.

What Constitutes Salary Income?

Salary income comprises several components, including the basic salary, house rent allowance (HRA), leave travel allowance (LTA), and other special allowances provided by the employer.

Each component has specific tax implications, and understanding these can help in effective planning and saving in income tax. For instance, HRA can be partially or fully exempt from tax if appropriate documentation is provided.

Other components like bonuses, commissions, and perquisites (non-cash benefits such as company car, accommodation, etc.) are also part of salary income and are taxed according to their respective rules.

How Salary Is Taxed?

Salary is taxed based on income tax slabs announced by the government in the Union Budget. These slabs determine the tax rate applicable to different income ranges, with higher rates for higher income brackets.

In addition to the basic salary, other components like HRA, LTA, and special allowances can impact the total taxable salary. The employer deducts TDS (Tax Deducted at Source) at the time of payment, ensuring that the salary is taxed at the source.

This system helps in spreading the tax payment over the year and reduces the burden of a lump-sum tax payment at the end of the financial year 2024.

Key Components Of Tax & TDS

1. Income Tax

Income tax is a tax levied on the income of person. It is calculated annually and paid to the government based on the total income earned during the financial year. The tax rates and slabs are defined by the government and are subject to change with each budget.

Understanding how income tax works and staying updated with the latest changes can help individuals. It helps to plan their finances better and take advantage of available deductions and exemptions.

2. TDS (Tax Deducted at Source)

TDS is a method of collecting income tax calculator from the salaried person at the source of income. Employers deduct a certain percentage of tax from the salary before disbursing it to the employee. This method ensures that tax is collected regularly throughout the year, reducing the chances of tax evasion and spreading the tax payment burden.

For employees, TDS helps in managing cash flow and ensures that a significant portion of their tax liability is settled by the end of the financial year.

Other Deductions

Apart from income tax and TDS, other deductions like provident fund contributions, professional tax, and any other deductions specified by the government can further reduce the taxable income.

These deductions not only help in saving tax but also contribute to long-term savings and social security. For instance, contributions to the Employee Provident Fund (EPF) are deducted from the salary before tax, thus reducing the taxable income and providing savings for retirement.

 

Practical Tips on How to Save Tax on Salary Income

There are several ways and hidden ways to save tax, but you need to make the plan to save income tax.

1. Optimize Your Salary Structure

Optimizing the salary structure can significantly reduce the tax burden and help for how to save the tax. Components such as Basic, HRA (House Rent Allowance), LTA (Leave Travel Allowance), and special allowances should be allocated wisely. For example, HRA can be partially or fully exempt from tax if proper documentation is provided. Properly allocating these components not only helps in reducing taxable income but also enhances the overall financial health of an employee. It helps employees for how to save income tax on salary by maximizing take-home pay and providing for future needs.

Allowances like HRA, conveyance, and medical reimbursements can reduce the taxable salary. Ensure that you claim all eligible reimbursements and maintain the necessary documentation to support your claims. For instance, medical reimbursement up to a certain limit is exempt from tax if supported by actual medical bills. Utilizing such allowances effectively can lead to substantial tax savings and better financial management.

2. Tax Exemptions With Tax Saving Scheme

Under Section 80C, investments up to INR 1.5 lakh in PPF, EPF, ELSS, and other specified instruments are exempt from tax. This is the best
Section 80D provides deductions for medical insurance premiums. Utilizing these sections can lead to significant tax savings. For instance, investing in tax saving bonds not only reduces taxable income but also encourages disciplined savings and investment habits. It is contributing to long-term financial security.

Other exemptions include education allowances, children’s hostel allowance, and transport allowance. To claim these exemptions, ensure that you maintain the required documentation and submit them to your employer.

For example, tuition fees paid for children’s education can be claimed as a deduction under Section 80C. Understanding and claiming these exemptions can reduce the taxable income significantly, leading to considerable tax savings.

3. Invest Wisely For Income Tax Saving

Think about wise investment if you want to save on income tax. Investing in PPF, EPF, ELSS, and tax-saving fixed deposits can reduce taxable income. The tax saving fund is not only provide tax benefits but also help in building a corpus for future needs.
For instance,

• Public Provident Fund (PPF) offers tax-free returns and is a safe investment option for long-term goals.
• Similarly, Equity Linked Savings Schemes (ELSS) provide the dual benefit of tax saving and potential capital appreciation, making them attractive for young investors.

Adopt a balanced approach by investing in a mix of long-term and short-term tax-saving schemes in India.
Long-term investments like PPF and EPF offer stability, while short-term investments like ELSS provide flexibility and potential for higher returns. Diversifying investments across different time horizons and risk profiles can optimize tax savings and enhance overall portfolio performance.

4. Save Income Tax With Benefits On Loans

Under Section 24, the interest paid on home loans is deductible up to INR 2 lakh per annum. Additionally, the principal repayment of home loans is eligible for deduction under Section 80C. Combining these benefits can result positively for the – how to save tax in salary!

Section 80E provides deductions on the interest paid on education loans for higher studies. There is no upper limit on the amount of deduction, making it a valuable tax-saving tool. This deduction is available for a period of eight years or until the interest is paid, whichever is earlier, providing long-term tax relief for those investing in education.

5. Plan for Retirement With Income Saving

Investing in NPS offers tax benefits under Sections 80CCD(1) and 80CCD(1B). Contributions to NPS are deductible up to INR 2 lakh, providing substantial tax savings and helping in retirement planning.

The NPS also allows for a portion of the accumulated corpus to be withdrawn tax-free at retirement, making it an attractive option for long-term financial security.

Other retirement savings schemes like EPF, VPF, and superannuation funds also offer tax benefits. These schemes ensure a secure financial future while reducing the current tax burden.

For instance, Voluntary Provident Fund (VPF) contributions are eligible for tax deduction under Section 80C and earn the same interest rate as EPF, providing a risk-free investment option for retirement savings.

Key Features of Superworks Payroll Software For Tax Management

First of all, Superworks has save tax calculator , you can check how much tax you save from your salary. Check the tax saving calculator below:

Read Also: Tax Saving Calculator

Other important features are mentioned below.

• Comprehensive Tax Management

Superworks HR and payroll software automates tax calculations, ensuring accuracy and compliance with the latest tax regulations. This reduces the manual effort and minimizes errors, providing peace of mind to employees and employers alike. The software considers various components of salary, exemptions, and deductions to compute the exact tax liability, ensuring that no detail is overlooked.

Stay updated with real-time notifications on changes in tax laws and regulations. The software ensures that your tax calculations are always in line with the latest guidelines. This feature is crucial in a dynamic regulatory environment where tax laws can change frequently, impacting the tax liability of employees.

• Efficient TDS Management

Super Payroll software simplifies the process of TDS computation and deductions, ensuring that the correct amount is deducted every time. This reduces the burden on payroll administrators and ensures compliance with tax laws.

The software automates the process of calculating TDS based on salary components and applicable exemptions, reducing the risk of human error.

Ensure timely filing of TDS returns and adherence to due dates with our automated reminders and compliance checks. This helps in avoiding penalties and maintaining a good compliance record. The software tracks due dates for TDS payments and return filings, sending alerts and notifications to ensure that deadlines are never missed.

• User-Friendly Interface

Superworks payroll software features an intuitive dashboard that provides a comprehensive overview of payroll and tax information. Easily access all necessary details and perform tasks with ease. The user-friendly interface ensures that even those with limited technical knowledge can navigate the software and perform essential functions without difficulty.

Generate detailed reports and analytics to gain insights into tax and payroll data. Use these insights to make informed decisions and optimize tax management strategies. The reporting feature allows users to track tax liabilities, view historical data, and generate customized reports for better financial planning and decision-making.

• Why Attend This Webinar?

Gain valuable insights from our expert Mohit Adalkha on effective tax-saving strategies. He will share their knowledge and experience to help you to know- how to save tax on salary income. This webinar will cover various aspects of tax planning, including salary structuring,

Engage with us in an interactive session where you can ask questions and receive personalized advice. This will help you understand how to tax save from salary and implement the strategies effectively.

This webinar will provide real-life examples and actionable tips that you can implement immediately. Learn practical ways to optimize your salary structure and save tax.

Webinar Details and Agenda

Title: Restructure Your Salary & Pay ZERO TDS

Date and Time: 2 PM, 19th July 2024

Registration Link: [Insert registration link]

Webinar Overview

• TDS Fundamentals
• What is TDS?
• Why Understanding TDS is Crucial for Salary Earners
• Return Frequency and Due Dates
• Key Timelines for TDS Returns
• Consequences of Missing Deadlines
• Sections and Exemptions
• Overview of Income Tax Act Sections Related to Salary
• Common Exemptions to Reduce Taxable Income
• Salary Structure with ZERO TDS
• Strategies to Restructure Your Salary
• Practical Examples and Case Studies

Explore practical examples and case studies that illustrate how to achieve a salary structure with zero TDS.

Conclusion

As this blog give the brief insight regarding the how to save tax planning can be done, Attending our webinar will equip you with the knowledge and tools to optimize your salary structure and save on income tax. Know more about that in our upcoming webinar.

The payroll software offers comprehensive tax and TDS management features, ensuring compliance and ease of use. Register for the webinar today and take the first step towards effective tax management and maximizing your savings.