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CA Sandeep Kanoi

CA Sandeep KanoiOften, investment for most individuals begins and ends with tax planning. Although it is pertinent to avail tax breaks, this should not be the sole focus. Start by jotting down your key financial objectives, the tentative time of money requirement and the corpus needed to achieve those goals. One can use tax saving investments effectively, to achieve financial goals. For example, one can take a children’s plan that also provides tax benefit. Consider the impact of inflation on your needs. After your first few working years, as income goes up, it is wise to invest beyond one’s tax saving investments to achieve your goals. Also, evaluate the life cover requirement, while planning for your taxes. We are giving below a brief on some of the Popular allowance / Exemption and deductions, benefit of which can be taken by the salaried taxpayers to reduce their tax burden.

Maximising your tax saving

1. Exemptions/reimbursements – Identify the reimbursements available from the company and take maximum advantage of the same. Normal expenses that one incurs could help save tax. Example- Telephone/fuel reimbursements, meal vouchers and company car. A person in lower tax slabs can reduce his tax liability to nil with exemptions alone.

Similarly, salaried employees staying in rented apartments can claim exemption under Section 10(5) of the Act in respect of house rent allowance by making the HRA a component of there salary.

Some of The Popularly Known Exemptions/Reimbursements

House Rent Allowance
Minimum of –

1. Actual HRA

2. Rent Paid – 10% of Basic

3. 40a% of Basic (Non-Metros) or 50% of Basic (Metros)

House Rent Allowance (HRA) Taxability & calculation


Transport Allowance

Rs 800 / Month (1600 Per Month from A.Y. 2016-17)

Leave Travel Allowance

Two trips in a block of 4 Yrs Amount not exceeding Air Economy or Rail AC I Fare shall be for shortest distance and for a single destination

Taxability of Leave Travel Allowance (LTA) – Section 10(5)

Medical Reimbursement – Section 17(2) proviso

Up to Rs. 15,000 in aggregate in a year

2. Deductions

(Republished with Amendments)

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Tags : section 195 (126) TDS (743) Withholding tax (48)

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