How Can Salaried Individuals Save Tax

How Can Salaried Individuals Save Tax?

If you are a salaried individual, there is no doubting the fact that you must have had countless discussions around saving tax, with everyone from your parents to your managers and colleagues at work. For those of us who earn a monthly income, the tax outgo is the bane of our existence, creating a gap between our CTC and our actual wages. And we are, always, on the lookout for ways to limit those dreaded outflows. If you are looking for legal and sure-fire ways to save tax, look no further. As salaried individuals, you can easily and optimally save on taxes by:

How Can Salaried Individuals Save Tax
  1. Rent allocation: If you are living in rental accommodation, you can submit your rent agreement and enjoy tax exemption based on the amount of rent paid on a yearly basis. This option falls under the house rent allowance component and, based on your job, it could be either fully or partially exempt from tax. As long as you keep all rent receipts at hand, you can claim for the tax benefit while filing for yearly Income Tax Returns.
  2. Conveyance exemption: If you travel to work and can submit proof of expense, be it for private vehicles or public transport, you can access conveyance allowance, based on company policies. If possible, get your CTC structured in a way that a part of the salary is paid as reimbursements, for this option is tax free and can help with your daily commute expenses.
  3. Leave travel allowance: This is another benefit that you can work out with your employer. Under this option, a part of your CTC would be allocated to trip expenses within the country, thus reducing your in hand salary and limiting the consequent taxes. You will have to submit bills to the employer as LTA can only be claimed through this route.
  4. Medical expenses: Most employers offer the option of medical reimbursements worth up to 15,000 rupees, under your CTC. You can claim this reimbursement, and the consequent tax exemption, by submitting bills for doctor consultation, medicines, and tests to your employer, who will then process the same for you.
  5. Insurance policies: Insurance is one aspect that we must all consider; especially given the unprecedented situations we now combat on a daily basis. From term insurance, health insurance, to life cover, each policy you pay premium on is tax-deductible as per Income Tax Act Section 80C, meaning you can save taxes while safeguarding your future and the future of your dependents. Further, you can also consider unit linked insurance plans or ULIPs as these offer dual advantages of investment and insurance. Everything from the premium paid to the sum assured and returns are tax exempt.


While these are the most common and feasible ways to save tax as a salaried individual, you can also consider additional options like food coupons as some employers offer a portion of the salary in the form of tokens which can be redeemed at grocery stores or food counters. This can be deducted from your CTC to ensure that your overall pay is less, thus limiting the overall tax outflow while meeting your daily needs. Saving tax is all about being smart and innovative, and these options will ensure you are on the right track.

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