Even the best of us at times have expenses that tend to outweigh our income. While we all dream of transfiguring our wish lists into check-out carts, our bank balances have a different story to tell. Hence, we resort to lowering our taxable income and accumulating every possible bit of our salary for ourselves. One such common practice is reducing tax liability by investing in Section 80C provisions like pension schemes, ELSS, life insurance, etc. But, do you know most of us miss out on other tax-free allowances that can reduce our taxable income up to a whopping 1.3 lakhs? Here are six tax-free salary components you can use to reduce your ballooned-up taxes:
1. Research allowance
Research allowance accounts for academic research and professional pursuits by the employee. The expense incurred or allowance given, whichever is lower, gets exempted from the taxable income. Research allowance includes newspapers, journals, magazines, and courses, amongst several other options.
2. Uniform allowance
This allowance is only applicable to people who are under obligation to wear specific clothing at work. The lower figure between the amount of allowance and the actual expense will be deducted from taxable income.
3. Meal coupon allowance
The employer provides a meal coupon allowance for two meals per working day. Hence, the funding amounts to a total of 24,600 as an annual deduction from taxable income.
4. House rent allowance(HRA)
HRA receivable by the employee is 50% of his salary in a metro city and 40% in a non-metro city. A person claiming the HRA deduction should be the one paying the house rent. The proof of the same should be submitted in the form of the house rent receipt.
5. Mobile phone and internet bills allowance
Did you know? Expenses incurred for prepaid and postpaid mobile & internet bills are allowed for tax exemption. Organizations usually allow one mobile and internet connection for the allowance.
6. Leave travel allowance(LTA)
You can claim to Leave Travel Allowance twice in four years. LTA only includes travel expenses. Your other expenses like accommodation and food will be rendered taxable.
We all know, taxes are inevitable, so the least we can do is leverage the above provisions and reduce our tax liability. Annually, it can help save up to 6500 for salaried individuals in the minimum tax bracket and 40000 for individuals in the highest tax bracket. One won’t hurt with a little more savings in their pocket.