11 Tax saving tips for working professionals

Every working professional is always on the lookout for options to save income tax. When the financial year-end is nearing, and it comes to declare investments, all working professionals want to know how to save tax. Surely, nobody wants to save their hard-earned money. Different people choose different ways of tax saving. Smart tax planning proves beneficial in saving a handsome amount over the long run. Several measures can be availed to lessen your taxable income. With efficient planning, one can save tax maximally and enjoy his/her income to the fullest. This also helps in planning and achieving financial goals. Being a working professional and an Indian taxpayer, you need to understand your tax slab as well as various tax-saving options for working professionals. This surely helps in figuring out how you can save tax. It is always better to do Income tax planning well in advance to avoid complications and unnecessary financial strain. Let’s take a deep look into efficient tax-saving options for working professionals.

How to save tax?

1. The first and most essential step is to understand your salary slip. If you know your salary breakup thoroughly, it becomes easy to figure out tax-saving strategies. 

2. Leave Travel Allowance – Tax saving for salaried employees also includes Leave Travel Allowance or LTA. This exemption is allowed for expenses on domestic/ shortest distance on vacation. Working professionals are not taxed on the travel expenses for immediate family, i.e., spouse, children, and parents. LTA exemption is calculated based on actual expenses, and travel bills need to be submitted to your employer for claiming this tax exemption. 

3. HRA- A working professional living in a rented house can claim House Rent Allowance to reduce tax expenditure. Rent receipts from the house owner need to be produced and a PAN card copy of the house owner. 

HRA is deducted on the least out of the following 3 amounts:+

1. Actual HRA received from employer 

2. Actual rent paid minus 10 percent of basic salary + DA

3. 50 percent of [basic salary + DA] for working professionals living in metro cities and 40percent for non-metros

4. Food coupons- Some employers provide meal or food coupons as part of the salary. These food coupons are not taxable up to a certain extent per month. A working professional can claim food coupons for about 22/23 working days on average and up to two meals per day. 

5. Donation/Contribution to charity- Working professionals get tax deductions on charitable donations from total income up to 100percent or 50 percent of the amount invested depending on the organization to which the charitable donation is made. 6. Section 80C: Understanding section 80C and tax saving schemes can help reduce your tax outgo significantly. Several tax-saving opportunities are there under 80C Section. 

Life insurance policy premiums for yourself, your spouse, and your children

PPF (Public Provident Fund) investment, EPF, NSC

Investments in Equity Linked Savings Scheme investment, NPS

Tuition fees paid for education for up to two children

Fixed deposits for a period of 5 years

Unit-Linked Insurance Plan for yourself, your spouse, and your children

A deduction upon the principal amount of a home loan can also be claimed under this section. 

There are many more options to explore. Try to understand different government-mandated provisions. By investing some time in research, you can study your salary slip and explore avenues to lower your taxable income. You can consult with experts to know more about tax-saving options. Get started now!