When an employee’s salary exceeds a certain level, tax deductions at source, or TDS, are often made from their pay. This is under Indian income tax laws. Workers must provide an “Income-tax declaration” each year that details their investments and expenses from the previous fiscal year.
The employer changes TDS deductions by either raising or lowering them following the employee’s actual savings or investment documentation.
Tips To Reduce TDS From Your Income
The following eight steps will reduce the tax burdens associated with TDS deductions from your pay:
1. House Rent Allowance (HRA) Optimization
Providing the landlord’s name, address, and PAN is important, particularly if the total amount of rent paid for the fiscal year exceeds Rs 1 lakh. If there is no PAN available, getting a declaration on Form 60 becomes compulsory.
2. Make Use of Food Discounts
If your company does not provide meal vouchers, try arranging with them. Meal coupons are free up to Rs 50 for every meal, which adds up to a Rs 2,500 monthly exemption for a 25-day work month that includes both lunch and dinner.
3. Donations to Charities
Employees can claim exemptions if they support recognized trusts or charity organizations such as national funds or approved temples. It becomes necessary to submit donation evidence in the form of receipts with all relevant information for certification.
4. Make Use of Leave Travel Allowance (LTA)
If there’s a travel allowance component missing from your pay scale, always make sure to include it. Before claiming exemptions, one must be involved in travel expenditures to be eligible for LTA.
5. Benefits of Health Insurance
Claims for deductions are supported by submitting an 80D tax certificate from insurance companies, which is accompanied by bank statements attesting to premium payments and receipts for medical examinations paid for during the fiscal year.
6. Interest on Loans for Residential Property
To claim this type of deduction, you must submit lender particulars (name, address, PAN) as well as a certificate from the bank or other approved institution detailing loan information (interest rates, payment amounts, and availing date).
7. Contributions to the National Pension System (NPS)
Claims for NPS-related deductions are validated by providing deposit receipts for the contributions made during the fiscal year. And they are supported by the bank statements.
8. Use the Benefits of Section 80C
Invest in Section 80C and other qualified instruments to maximize TDS savings. PPF (Public Provident Fund) is a recommended investment option for lowering TDS or total tax liabilities related to your pay since it offers a tax refund of up to Rs 1.5 lakhs yearly.
