How can Salaried Individuals Save Money on Income Tax?

Just like business owners salaried individuals have to pay income tax too. However, most of them rely on traditional investments as per Section 80°C to minimize the taxes when actually there are many other creative ways for the same.

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Some of these are:

1. House Rent Allowance

If you are not receiving any HRA from your employer but paying house rent, then you can claim a tax deduction as per Section 80CG of the Income Tax Act. You are allowed to claim any of the following (whichever is the smallest):

• 2,000 per month
• 25% of your income
• Excess of rent paid over 10 percent of your income

2. Restructure Your Salary

You can save a lot of money on tax payments by restructuring your salary, granted your company allows it. The following changes can help in minimizing taxes:

• Including allowances for education, transportation, etc. in your salary. Bills from these expenses can then be claimed for a tax
• Switching to food coupons from lunch allowances can give you tax benefit of Rs. 50 per meal.

3. Charities

By giving money to a charity organization of your choice not only you can help the needy, but also save money on taxes. However, it’s important to know that not every organization will grant you a 100% tax saving.

You can also donate money to selective religious or scientific organizations to get tax benefits.

Depending on how you spend your salary you can easily save 100% of your income tax. The key is having the knowledge of the options given above.