10 allowances to include in your salary for maximum tax savings and financial benefits
Learn how to save taxes by including tax-free allowances like HRA, LTA, medical reimbursement, and more in your salary. Maximize exemptions and reduce your taxable income effortlessly with these tips.
ZeeBiz WebTeam | Dec 02, 2024, 04:44 PM IST
Tax-saving can be easier than you think! Did you know that certain allowances in your salary are entirely tax-free and can significantly reduce your taxable income? From House Rent Allowance (HRA) to Leave Travel Allowance (LTA) and medical reimbursements, these components not only save taxes but also offer additional financial benefits. If your salary package doesn’t include these allowances, it’s time to talk to HR and optimise your income structure. Let’s explore the top 10 allowances to save big on taxes.
1/10
House Rent Allowance (HRA)
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Comprises 40-50% of your basic salary.
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If not provided, request HR to include it in your salary.
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Helps reduce taxable income.
Comprises 40-50% of your basic salary.
If not provided, request HR to include it in your salary.
Helps reduce taxable income.
2/10
Traveling or Conveyance Allowance
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Covers travel costs between office and home.
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Not universally provided; request HR to add it.
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Amount is tax-free.
Covers travel costs between office and home.
Not universally provided; request HR to add it.
Amount is tax-free.
3/10
Food Coupons or Entertainment Allowance
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Includes meal vouchers or Sodexo coupons worth Rs 2,000-3,000 monthly.
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Requires submission of food bills for tax-free reimbursement.
Includes meal vouchers or Sodexo coupons worth Rs 2,000-3,000 monthly.
Requires submission of food bills for tax-free reimbursement.
4/10
Car Maintenance Allowance
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Reimburses car-related expenses, including fuel, maintenance, and driver salary.
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Ideal for employees with high vehicle expenses.
Reimburses car-related expenses, including fuel, maintenance, and driver salary.
Ideal for employees with high vehicle expenses.
5/10
Leave Travel Allowance (LTA)
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Covers travel expenses for long trips twice in 4 years.
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Tax-free reimbursement up to a specified limit.
Covers travel expenses for long trips twice in 4 years.
Tax-free reimbursement up to a specified limit.
6/10
Mobile Phone and Internet Allowance
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Reimburses mobile and internet bills up to a set limit.
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Reduces taxable income.
Reimburses mobile and internet bills up to a set limit.
Reduces taxable income.
7/10
Uniform Allowance
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Covers expenses for maintaining official uniforms.
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Available in select companies; check with HR.
Covers expenses for maintaining official uniforms.
Available in select companies; check with HR.
8/10
Education/Hostel Allowance
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Applicable for employees with children.
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Covers costs based on the child’s age and qualification.
Applicable for employees with children.
Covers costs based on the child’s age and qualification.
9/10
Newspaper/Magazine/Books Allowance
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Supports employees in roles requiring regular reading, such as media.
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Includes reimbursement for subscriptions up to a specified limit.
Supports employees in roles requiring regular reading, such as media.
Includes reimbursement for subscriptions up to a specified limit.
10/10
Medical Allowance
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Reimburses medical expenses for employees and families.
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Tax-free and ensures financial support for healthcare.
Reimburses medical expenses for employees and families.
Tax-free and ensures financial support for healthcare.