Ways to Reduce Tax Expenditure by More Than Rs 1 Lakh!
10 perks that can potentially reduce annual tax liability by over Rs 1 lakh for a taxpayer in the 30% tax bracket.
Tax planning is an essential aspect of financial management, and knowing how to leverage available deductions can significantly reduce one's tax burden. Availing 7-8 of the 10 tax-saving benefits listed below can potentially reduce the annual tax liability by over Rs 1 lakh for taxpayers in the 30% tax bracket. It's important to note that while some perks have predefined limits, the amounts claimed for others should be justifiable, and receipts or bills are essential for claiming tax exemptions.
Leave Travel Allowance (LTA): This allowance permits employees to travel within the country for vacations with their families. Reimbursement of travel expenses, including road, rail, or air travel, is granted upon submission of actual bills. The annual tax-free limit for LTA is Rs 1,00,000.
Fuel and travel expenses: For employees travelling for work purposes, reimbursement of travel and fuel expenses is available, with a tax-free limit of Rs 28,800 annually.
Vehicle maintenance and driver salary: An allowance for vehicle maintenance and driver salary can be claimed for official purposes, with a monthly limit of Rs 3,300 and an annual tax-free limit of Rs 39,600.
Telecommunication reimbursements: Reimbursement of telecommunication expenses, including landline, internet, and mobile phone bills, is tax-exempt up to Rs 36,000 annually.
Meal coupons: Meal coupons for a tax-free food allowance of Rs 50 per meal are provided, totaling Rs 2,200 per month for two meals during working days, with an annual tax-free limit of Rs 26,400.
Books & Periodicals: Reimbursement for books, journals, newspapers, and online subscriptions is tax-free, supported by actual bills, with an annual limit of Rs 24,000.
Learning and development: Companies may cover the costs of online or offline courses for employee skill enhancement, tax-free up to Rs 48,000 annually upon bill submission.
Uniform allowance: Some employers provide an allowance to cover the cost of work attire, with an annual tax-free limit of Rs 24,000, requiring receipts as proof of purchase.
Gadgets and moveable assets: Companies may purchase items under their name and provide them to employees for personal use, with an annual tax-free limit of Rs 60,000.
Scholarship fund: Financial assistance provided by companies to support the education of deserving children of employees, with an annual tax-free limit of Rs 60,000 designated for education-related costs like tuition fees, books, and study materials.
In conclusion, understanding the nuances of LTA and travel reimbursements can help individuals optimise their tax planning strategies and minimise their tax liabilities effectively. By leveraging these benefits in a prudent manner, taxpayers can cut down their tax outgo by over Rs 1 lakh, thereby maximising their savings and enhancing their financial well-being.
