How to choose your basket with tax -saving grants

Copyright © HT Digital Streams Limit all rights reserved. Money Anil Posts 7 Min Read 09 Apr 2025, 04:15 PM IST While deciding on what tax saving allowance you should include in your salary, you must also ensure that it is in line with your financial goals. (Pexels) Summary Not all tax -saving grants are created equal. Some more than others may hold significant tax benefits, which significantly affect your salary and tax expenses. Mint helps you understand exactly which documents are needed for each allowance. As the new financial year begins, you may have received an email from HR asking you to choose a tax regime and tax-saving allowance in your salary. If your employer offers a flexible salary structure, you can optimize grants for tax efficiency. Remember, not all tax -saving grants are created equal. Some more than others may hold significant tax benefits, which significantly affect your salary and tax expenses. According to the Chartered Accountant Vijaykumar Puri, partner at VPRP & Co. LLP, is the first critical step in understanding your salary structure. “The key is to ensure that all grants are properly structured in your salary,” he advised. Mint helps you understand exactly which documents are needed for each allowance. At home lease and home loans, the conditions to claim the release of home lease (HRA) are set out under Article 10 (13A) of the Income Tax Act and may indeed be complicated, “says Puri. 50% of the salary if the taxpayer lives in a metro city (or 40% for non-metro cities); and the amount by which the rent paid annually, more than 10% of the basic salary and believers. However, if he lives, if the individual is living in another city and rented, they can still have HRA release without any problems. outlining. Employees usually receive a limited allowance of £ 1,800 per month, which translates around £ 2100 annually. To claim this, you must maintain a careful record of your expenses, including original fuel bills and receipts for maintenance services. “Exemptions from car allowance are dependent on use, ownership and documentation. For a car owned by the employee and partly used for official duties, exemption up to £ 1,800 per month (plus £ 900 for a driver) is allowed, provided it is supported by proper logs. Exemptions of car allowance depend on use, ownership and documentation. For a car owned by an employee and partly used for official duties, exemption is allowed to £ 1,800 per month (plus £ 900 for driver). When it comes to the wages of the car driver, the complexity is increasing. These expenses require comprehensive documentation, including the manager’s salary receipts, and may require an employment agreement and proof of payment. You may also have to submit a copy of the vehicle’s RC book and/or the driver’s license every financial year. These documents must be provided with the supporting accounts at the time of your first claim submission during the appropriate financial year. Read also | Investment with a goal -based approach amid the market volatility is the key to financial success that cars have rented. In the first one, the company takes a car to rent and gives it to the employee for official and potentially personal use. “If the company rents the car, the rental amount is added to the employee’s CTC as a conditions,” Puri said. This means that the rental value becomes part of the taxable income, which offers no direct tax benefit. Employees must pay a fixed procedural tax if they also use the car for personal use. The monthly tax tax ranges from £ 1,800 to £ 2400, depending on the car’s capacity of the car hired. If the employee also compensates on the manager of the manager, an extra £ 900 must be paid. The alternative scenario involves employees personally renting vehicles and seeking compensation. Here, too, careful documentation is crucial. Employees must submit comprehensive lease agreements, original accounts and proof of payment. “The key is to ensure that these expenses are part of the formal salary structure,” Puri emphasized. However, there is no standardized cap on car leases. Although fuel costs are usually limited to 1,800 monthly, the rental amount varies greatly based on individual company policies. “Every organization approaches it differently,” Puri said. Read also | How financial rules of thumb help and injure investors are the tax implications equally complicated. Unlike standard deductions, car rental does not offer a simple tax -saving mechanism. Employees must navigate a labyrinth of company -specific guidelines, employment contracts and tax regulations. The takeaway: Car leases are less about tax optimization and more about the understanding of the nuanced relationship between employer, employee and tax regulations. Transparency, documentation and a thorough understanding of one’s employment contract is the key to navigation of this complex terrain. Puri warned that the leases provided by the employer are not always the most cost-effective choice. “Many times, employees find that the option for renting corporate motor is more expensive – even after they have taken into account the tax benefit – to buy or rent the car independently. Not to talk, if the employee leaves the organization before the lease ends, the benefits can be recovered by the employer,” said. “At the end of the lease, the employee can choose to surrender the car or buy it by paying the remaining value of the car, ranging from 50-10% of the value of the car. Also read | The reality of Indian trading boom: Platforms win, retail investors lose communication benefits Telephone and Internet expenses can also be claimed with invoices paid. Interesting tax -saving avenue, especially for those in higher tax hooks. For employees of the central government, contributions up to 14% of the basic salary and beloved allowance (DA) are released even under the new tax regime, “said Puri. For other employees, the PET is 10% of the basic plus DA among the old regime, and 14% among the new regime. Walking from a year, he invests £ 1,50,000 in tax -saving instruments such as Elss, PPF or tax -saving fixed deposits under section 80c. (B). In addition, he donates £ 150,000 to a registered charity trust, which qualifies for deduction under section 80g. Donations to charity trusts approved under section 80G usually qualify for a 50% deduction, while contributions to registered political parties are eligible for a 100% deduction, both subject to appropriate conditions and limits. Read also | Money and happiness: The chicken and egg problem together, all these deductions amount to £ 8,00,000 at the breakaway where the tax is payable under the old and new regimes are almost the same. As Mr. A succeeds in pushing his deductions even slightly beyond this point, either by additional eligible investments or expenses, the old regime will be more tax efficient. This is because it will further reduce its taxable income and move it into a lower tax rate, or at least reduce the tax on part of its income. High rental payers or those with home loans can also find the old tax regime beneficial. However, for most employees, the new tax regime offers more simple taxes with less complications. The new tax regime makes sense when your total deductions and exemptions are less than the breakaway for your income level. It is ideal for those with a simpler salary structure, fewer investments, or who submit a hassle-free, low-documentation tax. According to Puri, the goal is not only to save taxes, but also to ensure that these deductions are in line with your financial goals. Catch all the business news, market news, news reports and latest news updates on Live Mint. 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