How to make your salary package
tax-efficient
Make your salary package tax-efficient by planning
your income tax well.For income tax planning, you can structure your pay
package so that it includes various tax-free payments rather than getting it
all as basic salary.
Some of the common payments are:
• House rent allowance (HRA)
• Transport allowance
• Reimbursement of medical expense, hotel bills, foreign travel of
spouse, and books
• Car provided by company
• Food coupons
• Leave travel concession (LTC)
Your EPF (employee provident fund) contribution is at
your discretion; you may adjust it
depending on your other investment needs. It is a good
idea to raise your employer's contribution up to 12% of your salary, as it is
exempt from tax.Though you get tax benefit on certain allowances mentioned
above, all perquisites are taxable as normal salary. Some common perquisites
which are taxable as normal salary are:
• Loan at an interest rate lower than SBI PLR
• Rent-free accommodation
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