The upcoming financial year, which is 2024-25, will start in April. During this time, preparations for income tax for taxpayers will also begin.
Even though taxpayers still have time to plan for tax savings in the current financial year, experts always recommend not waiting until the last moment.
Planning for taxes in advance can help you save more money.
Tax-saving activities usually begin before the start of the new financial year.
Here are some benefits of planning tax savings in advance, especially for people who earn a salary.
If you earn a salary, these methods can assist you in saving taxes.
House Rent Allowance (HRA)
If you live in a rented house during your job, you can get a tax exemption. To claim HRA, you need to receive HRA from your employer and pay rent for the house you live in.
The exemption calculation depends on three factors: the actual HRA received, 50% of basic salary + DA (in metro cities) or 40% of basic + DA (in non-metro cities), and the actual rent paid after deducting 10% of basic salary + DA.
The tax exemption is granted on the lowest of these three amounts.
Leave Travel Allowance (LTA)
Your company may provide LTA for you and your family’s travel. The amount spent on plane, train, or bus tickets for travel is exempt from tax.
LTA can be claimed twice in a block of four years, and the maximum amount is the lower of the actual travel expenditure or the amount received from the employer.
Internet and Phone Bills
With the rise of work from home due to Covid, the use and cost of phone and internet have increased.
You can exempt the amount spent on internet and phone bills from income tax when filing tax returns.
Tax will not be applied to the amount paid or the salary under this category, whichever is less.
Food Coupons
If your company provides food allowances or pre-paid food vouchers/coupons, Rs 50 for one meal is tax-free.
This way, using such coupons can make Rs 2,200 per month or Rs 26,400 per year tax-free.
Fuel and Travel Reimbursement
Reimbursements for taxi or cab expenses related to office work are tax-free.
If you use your own car or a company-provided car, the payment for fuel and maintenance expenses can also be tax-free.
Newspapers and Magazines
Payments made for the purchase of books, newspapers, and magazines are tax-free, provided the original bill is attached.
The amount less than the prescribed limit remains outside the scope of tax.
