Most of the salaried persons aspire to raise their savings and attain a life free from any financial burden. Majority of salaried persons do not acclimatize to plentiful tips of maximizing their savings. Moreover, they are not aware of tips to save income tax by adopting tax efficient investment alternatives available in market. People usually do not make investments on time and this is the leading cause why they finish off paying huge costs of taxes by the end of financial year. Salaried persons often believe that financial planning is of no use to them, as their income is fix and regular. It is a misconception that savings automatically mounts up in bank and salaried people do not require intrusion to raise financial gains.

What is Tax Planning?

Tax planning forms an imperative part of financial planning. In general, great amount of unintelligible details available in market prevents you to acquire sufficient information about options that can maximize your income via tax savings. This further makes it simple for people to strive for a lucrative and probably the best alternative. In this competitive era, most of the firms struggle to sell their monetary products to myriad people.

Tip on How to Save Amount on Tax

Without sufficient knowledge, it becomes quite intricate for a person to minimize the tax and uplift personal savings. To accomplish all the goals in a thriving manner, you can go after some of the useful strategies.

1. Exploit Section 80C: This section propose highest deduction of Rs. 1, 00, 000. You can make the most of this section by investing amount in one of the available investment alternatives. Some of these alternatives include Provident Fund, LIC premium, fixed deposits of 5 year with back or post office, tuition fees of children, "National Savings Certificate" and "Equity Linked Savings Scheme".
2. Reconstruction of Salaries: By reconstructing salary, you can easily lessen up tax liability. However, not every company permits salary reconstructing. If it happens, you can choose food coupons in place of lunch allowances, as an amount of Rs. 60, 000 per annum is exempted from tax. This also includes travelling allowances, uniform expenses, telephone expenses and medical expenses to name a few.
3. HRA or "House Ret Allowance": If you are a tenant or paying rent and not receiving any allowance from company, then it is always worthy to claim under Sec 80G.

À      25% of total income

À      Excess of amount over 10 percent of income paid for rent

À      This deduction is not applicable if your wife or child holds residential accommodation in close proximity

À      Rs. 2,000 each moth

À      Actual amount of HRA given by employer

À      For metro cities, it is 50% of basic salary and 40% of salary in case of non-metro cities

1. Home Loans: It is very essential for a person to use home loan in an efficient manner to save tax. Principal amount of loan is normally included as per section 80C that offer deduction to the maximum of Rs. 1, 00, 000.
2. Leave and Travel Allowance: A salaried person can use Travelling and Leave allowances for holidays that can be availed twice in the tenure of 4 years. If you failed to claim this benefit in four-year block, then you can carry forward single trip to following block and can be entitled for 3 exceptions in that particular block.