How to pay less tax in F.Y.
2023-24| The beginning of the new tax year is a good time to reassess your
finances and also explore possible changes that can help you save taxes and
maximize your wealth.
The growing season is about to begin. While a higher
salary is always good news, it comes with the
backlash of higher taxes. In some
cases, the increase may lead the individual to a higher tax slab. For
example,
if a person with an income of Rs 10 lakhs gets a 20% raise, his tax rate
changes from 20% to
30%. Rs.2 lahks up.
To optimize the tax, you must
reorganize income and investments so that all available tax deductions and
exemptions are used up to the maximum limits allowed. The following steps may
help:
You may also like- Master of Form 16 Part B for the Financial Year 2022-23 and Assessment Year 2023-24[This Excel Utility can prepare at a time 50 Employees
Form 16 Part B]
Many companies allow their
employees to make changes to the CTC at the beginning of the fiscal year. If
your company gives you that option, restructure your salary to include more
tax-efficient bonuses. This includes reimbursement for phone and internet
bills, gas and travel expenses, food stamps, and newspaper bills. After the
implementation of GST, the car rental option has lost its appeal, but the
driver's salary, gasoline, insurance, and maintenance are still beneficial.
For the past two years, Holiday
Travel Assistance (LTA) has not been able to be used very efficiently due to
Covid travel restrictions. Your family travel fare is eligible for tax
exemption as part of the CTC. Please note that the LTA is expected to be
integrated into the CTC at the beginning of the year. You cannot opt out later
in the year or claim it when filing the ITR.
You may also like- Master of Form 16 Part B for the Financial Year 2022-23 and Assessment Year 2023-24[This Excel Utility can prepare at a time 100 Employees
Form 16 Part B]
Opt for NPS contribution
This benefit is offered by many
companies to their employees and is a diamond in the rough. Up to 10% of the
base salary placed in the NPS is exempt from tax under Sec. 80CCD(2). However,
only 10% of employees who received this benefit opted for it, despite the fact
that it can significantly reduce the tax. NPS outperforms mutual funds in terms
of cost and outperforms other retirement savings options (such as Provident
Funds, PPFs, and insurance plans) in terms of ret.
The NPS can help save more tax if
the taxpayer invests in the scheme on their own. Under Section 80CCD(1b), there
is an additional deduction of Rs 50,000 for NPS contributions. This is in addition
to the deduction of Rs.1.5 lakh allowed under Section 80C.
Start
investments with tax savings
There is a saying that what is well
started is only half done. For the same reason, don't wait until the last few
months of the tax year to make your tax-saving investments. If you plan to
invest in an ELSS fund, start the SIP in April. Starting in April will allow
you to spread your risk over time instead of putting up a lump sum at the end
of the year. Even if you intend to go with a risk-free fixed-income option such
as PPF, invest as soon as possible.
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April 19, 2023
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