Income Tax Season: 10 allowances that can optimise your income tax benefits considerably
Know how to maximize tax savings through employee allowances in this article. Ensure that the mentioned allowances are integrated into your salary structure to reduce taxable income and optimise financial benefits. Consult with HR to include these allowances and effectively manage your tax liabilities while enjoying various perks tailored to your employment.
Know how to maximize tax savings through employee allowances. This article covers essential benefits like 'House Rent Allowance' (HRA), 'Travel and Conveyance Allowance', food coupons, car maintenance, 'Leave Travel Allowance' (LTA), 'Mobile Phone and Internet Allowance', 'Uniform Allowance', 'Medical Allowance', 'Education/Hostel Allowance', and 'Newspaper/Magazine/Book Allowance'. Ensure these allowances are integrated into your salary structure to reduce taxable income and optimize financial benefits. Consult with HR to include these allowances and effectively manage your tax liabilities while enjoying various perks tailored to your employment.
House Rent Allowance (HRA)
Many companies offer house rent allowances (HRA) to their employees, typically amounting to 40-50% of their basic salary. If your company does not provide HRA, promptly discuss with HR to incorporate it into your salary structure to capitalise on tax savings.
Travel or Conveyance Allowance
Transport or conveyance allowances cover commuting expenses between your residence and workplace. While most companies include this in their employees' compensation, some may not. Ensure it is integrated into your salary to mitigate tax liabilities and optimise benefits.
Food Coupons or Entertainment Allowance
Food coupons, meal vouchers, or entertainment allowances, such as Sodexo coupons, can also reduce your taxable income. Submit food bills to your company for reimbursement without tax deductions, typically around 2000-3000 rupees per month.
Car Maintenance Allowance
Certain companies offer car maintenance allowances, encompassing costs like fuel, upkeep, and even driver's wages. If you have substantial car-related expenditures, inquire with HR about including this allowance to avoid taxation.
Leave Travel Allowance (LTA)
LTA enables employees to claim expenses for two extended trips every four years. Ensure LTA is part of your compensation package to leverage tax benefits on reimbursed travel expenses within defined limits.
Mobile Phone and Internet Allowance
This allowance reimburses mobile phone and internet bills up to a specified threshold, reducing your taxable income. Include it in your salary structure to maximize tax savings.
Uniform Allowance
Some companies provide uniform allowances to cover the upkeep of work attire, exempt from tax. Verify if your company offers this allowance and include it in your salary accordingly.
Medical Allowance
Certain companies offer medical allowances to reimburse medical expenses for employees and their families. Ensure this allowance is included in your salary to benefit from tax savings and healthcare support.
Education/Hostel Allowance
Employees with children may receive education or hostel allowances based on their child's age and educational level. Consult HR to understand how to include and benefit from this allowance.
Newspaper/Magazine/Book Allowance
Certain professions necessitate reading materials like newspapers, magazines, or books. Companies may provide allowances for these expenses up to a set limit. If applicable, include it in your salary structure to save on taxes