HOW TO MINIMIZE THE TAX

Everyone one in India feels the the tax as a burden but its the only source of income for our government to provide us the basic infrastructure still there are many taxes which a person bears and it actually becomes the burden, there are some ways with which one can not completely remove the TAX burden but definately can minimize it, so here are some of its ways for the salaried personnel.......

1. 1 
   Save on House Rent Allowance (HRA). (FOR SALARIED PERSON ONLY)
   •  Check your salary slip for split of Basic and HRA.
   • Compare your monthly rent, basic pay and HRA.
     • If you live in your own house, request your employer to restructure your salary, so most of it is Basic and very less is treated as HRA. This will give you other benefits associated with a higher Basic Pay.
     • If you pay more rent than your monthly HRA, check whether HRA is 50% of Basic. If it is not, request your employer to increase your HRA and decrease your Basic, so that HRA is 50% of Basic. If HRA is already 50% of Basic, you are already getting the best possible benefit of HRA exemption.
     • If you pay less rent than your monthly HRA, again request your employer to reduce HRA and make it equal to rent; increasing your Basic Pay instead.
     • Make sure you obtain rent receipts from your landlord. Preferably, pay rent by cheque.
     • Provide the rent receipts to your employer well before the last day specified by them.
2. 2
   Use tax saving investments.
   • Check your salary slip for monthly PF deduction. Multiply by 12 to get the annual value.
   • See how much this falls short of Rs1 lakh.
   • Start a Systematic Investment in a tax-saving mutual fund (e.g. DSP Black Rock Tax Saver). Make sure the entire shortfall above is covered before 31 March through the systematic investments.
   • If you are over 50 years of age, you may bridge this shortfall by putting the amount in PPF, instead of the Tax Saver above.
   • Watch out in the market for infrastructure bonds from IFCI, LIC or IDFC. Invest Rs20,000 in any one such bond.
   • Provide the details of the above investments to your employer.
   • When you receive Form 16, make sure the deductions are given under Chapter VI.
   • 80C Deductions= Sum of PF and your tax saving investments, up to Rs1.5 lakh.
3. 
   
   3
   Find tax saving insurance.
   • If you do not have a medical cover for yourself and your family, take one immediately. Cover dependent parents, if applicable.
   • Provide the details of the above investments to your employer.
   • When you receive Form 16, make sure the deductions are given under Chapter VI.
   • 80D Deduction= your medical insurance premium.
4. 4
   With allowances.
   • Make sure your salary slip has Rs800 per month as conveyance allowance.
   • If you have incurred medical bills in the year, make sure there is an annual Rs15,000 as medical reimbursement in your salary slip.
   • If the above two items are not present, request your employer to provide them by reducing your Basic. Remember, these are tax-free.
5. 5
   Loans
   • If you have a home loan going, make sure you declare this to your employer.
   • When you get Form 16, make sure the interest paid under section 24B for the self occupied house in the year is shown as a loss in House Property. This will reduce your tax liability, as such limit is increased from Rs. 1.5 lac to Rs 2.0 Lac as amended in the union budget 2014-15 and is applicable from financial year 2014-15, 
6. 6
   Donations.
   • If you have made donations to an approved institution, you can provide the original receipt to your employer.
   • When you get Form 16, make sure the amount is shown under Chapter VI Section 80G.