Tax Deducted at Source (TDS) deductions from an employee’s salary are standard practice under India’s income tax laws once the salary surpasses the defined threshold. Annually, employees are required to furnish an ‘Income-tax declaration,’ disclosing their investments and expenses from the preceding financial year.
The employer then adjusts TDS deductions accordingly: either increasing or decreasing them based on the actual proofs of investments or savings provided by the employee.
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# Strategies to Minimize TDS from Your Salary
Here are eight proactive measures to curtail the tax liabilities linked with TDS deductions from your salary:
1. House Rent Allowance (HRA) Optimization
Submitting essential details of the landlord—name, address, and PAN—is crucial, especially when the rent paid during the fiscal year exceeds Rs 1 lakh. In cases where the PAN isn’t available, securing a declaration in Form 60 becomes necessary.
2. Leverage Food Coupons
Negotiate with your employer for food coupons if they’re not provided. Meal vouchers, exempt up to Rs 50 per meal, can accumulate to a monthly exemption of Rs 2,500 for a 25-day working month, considering both lunch and dinner.
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3. Charitable Contributions
Supporting authorized trusts or charitable institutions like designated temples or national funds allows employees to claim exemptions. Submission of donation proofs via receipts, containing all relevant particulars, becomes imperative for validation.
4. Utilize Leave Travel Allowance (LTA)
If your salary structure lacks a travel allowance component, request its inclusion. Eligibility for LTA involves incurring travel expenses before claiming exemptions.
5. Medical Insurance Benefits
Providing an 80D tax certificate from insurance companies, backed by bank statements confirming premium payments, along with receipts for health check-ups during the fiscal year, substantiates claims for deductions.
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6. Interest on Residential Property Loans
Submission of lender particulars—name, address, PAN—and a certificate from the bank or authorized institution outlining loan details, such as availing date, installment amounts, and interest rates, is necessary for claiming this deduction.
7. National Pension System (NPS) Contributions
Furnishing deposit receipts for the contributions made during the fiscal year, supported by bank statement extracts, validates claims for NPS-related deductions.
8. Leverage Section 80C Benefits
Maximize TDS savings by investing in Section 80C and other eligible instruments. PPF (Public Provident Fund), allowing a tax rebate of up to Rs 1.5 lakhs annually, stands as a preferred investment avenue for reducing TDS or overall tax liabilities associated with your salary.
Taking advantage of these strategic avenues can significantly reduce TDS deductions, easing the overall tax burden on your salary income.
