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I got my first job. I cant still forget my joy when I saw the offer letter in my hand and the
first salary amount being credited in my bank account. At that time whatever was
credited in my bank account was great I did not care about how much tax got deducted
out of my gross salary its relationship with my net cash salary. However, very shortly I
realised that something is going horribly wrong. I was paying a good part of my salary to
the tax man which could be easily prevented should I tax some easy and quick steps.
An online tax advisory and compliance site. Aashish is passionate about Indian taxes and
loves to write articles on the Indian tax system. He has worked with KPMG and
JRC advisory in international and domestic taxation with a cumulative experience of 6
years in taxation. He shares some of those easy to implement tax tip to prevent the
money being handed out to the tax authorities and is specially geared towards salaried
people.
An employee is offered many options to structure his salary to ensure maximum tax
benefit. As a part of his salary an employee can receive various allowances (either
completely exempt or partly exempt) to reduce his eventual tax liability.
Rs. 10,00,000/-
If an employee is not covered under the gratuity act then, the lower of the following will
be exempted from tax:
Rs. 10,00,000/-
3. New pension scheme (NPS) is applicable to salaried employees to reduce their overall
salary. In this scheme an employer contributes an amount to the NPS which is the same
amount that is contributed by the employee. Both of these contributions are eligible for
deduction u/s 80 CCD (2) of the act. Thus such contributions reduce the overall tax
liability of the employee.
4. House rent allowance (HRA) is paid by an employer to an employee to pay any rental
towards his house property. An exemption is available under such HRA. The exemption
is based on the least of the following:
An amount equal to 50% of the yearly salary received (applicable to major Indian
metros and 40% in other cases)