Track your income sources Use allowances, reimbursements, retirement funds to your advantage
Where do you get your income from?
House: That investment you made in the real estate sector. What is deducted in this income is the 30 % income post house tax and the interest paid on loan for buying/construction of the property.
Your own business: The profit you earn from your own shop or venture minus the expenditure for business and losses
Capital Assets: Your investments in property, shares, gold, mutual fund policies etc, selling them can earn you a profit or a loss.
Other investments: Such as PPF, NRE account interest accumulation, gifts from relatives etc. Investments made in the name of children below 18 years or by letting out your property.
Employment Provident Fund
To encourage savings for the social security of employees, you have this provision. The employee contributes a fixed percentage of his salary towards these funds and in many cases employer also contributes. The whole contribution along with interest is credited to employee’s account. If you are a member of the EPFO for more than 5 years ( will be reduced to three in soon) or more, then it is non taxable income. However, if you withdraw before the stipulated it is taxable.
Gratuity
You need to spend 5 years and above as a permanent employee in a company and any such payment on termination or retirement exempted from tax up to a maximum of Rs 10 lakh in a lifetime.
Allowances and Concessions
Those staying in rented accommodation can avail of an exemption against the HRA received and only the balance will be taxable. In certain companies if you haven't availed of your entitled leave, you may have an option to get it encashed.
Reimbursements
LTA: You and your family's travelling expenses on an annual holiday within India are eligible for a tax break.
Medical and Telephone: Medical expenses of up to Rs 15,000 per year or your telephone expenses, including data charges, are exempt. Also if you avail of meal vouchers like Ticket and Sodexo these are exempt from tax to the extent of Rs 50 per meal.
Fuel/Transport
In case a car is provided to you by your company or in case the company is paying you for the maintenance and fuel costs of the vehicle you drive. Some employers also offer car on lease, which could bring down your income tax significantly Transport allowance. Your daily conveyance needs is tax-exempt up to Rs 1,600 per month.
