If your salary comes under the tax net, then as a citizen of India it is your responsibility to pay tax on your income. Not paying tax or evading tax is a legal offence. However, the Income Tax Department itself provides many such facilities by using which you can save your tax.
New Delhi. Income Tax. Direct tax collected by the government, which is the responsibility of the citizens to pay, because tax is a means of earning revenue for the government, the revenue from which the country runs. However, the Income Tax Department provides tax exemption to salaried individuals on various types of investments.
There are many such things in the salary structure of a salaried person, on which it depends how much tax will be deducted. The difference between the change in salary structure may be that two people with the same CTC have to pay different income tax. To reduce your tax liability, there are some questions related to salary structure that you must ask your HR.
First question- Can reimbursement be added to the salary structure?
If there is no reimbursement option in your salary structure, then you will get your in-hand salary in full and that will be your gross taxable salary. On the other hand, if there is an option of reimbursement, then you will get a part of your salary only when you get reimbursed by raising a bill for it. In this case, the part of salary that you will get on claiming reimbursement will be deducted from the gross taxable salary.
Suppose your annual in hand salary is Rs 9 lakh, then your gross taxable income will be Rs 9 lakh. On the other hand, if you keep 15 thousand rupees i.e. 1.80 lakh rupees in reimbursement, then your gross taxable income will remain only 7 lakh 20 thousand.
Second question- Will the company contribute to your NPS?
You can also take NPS plan yourself, but if the salary structure of your company allows NPS contribution, then you can get tax exemption on that contribution also. By taking NPS as an individual, in the old tax regime, you get tax benefit under 80C. Overall, tax benefit can be taken under 80C only on an amount up to 1.5 lakh. But if you take NPS as an employee, then the contribution up to 10% of your salary and DA will be tax free under 80CCD (1). Along with this, you can take separate tax benefit of up to 50 thousand under 80CCD (1B).
By adding reimbursement and NPS contribution to the salary structure, you can reduce your tax liability by several thousand, in many cases you can reduce your tax liability to zero.
