TDS (Tax Deducted at Source) is the tax deducted on income like salary, business, capital gains, house property, etc, by the employer and deposited to the IT department. We will talk about the ways by which you can avoid TDS on salary.
Ways of Reduction
Chapter 6A of ITA 1961 has provisions that allow you to apply for deductions on TDS on salary. You can declare your claims to your employer. The popularly claimed sections of deductions are-
This section allows deductions up to Rs. 1.5 lakhs if you invest in suitable fields. These fields are Life insurance premiums, ELSS investments, Sukanya Samriddhi Yojana, Senior Citizen Saving Scheme, NPS, PPF, EPF, Tuition fee paid for children, Home loan repayment, Stamp duty paid on a property, NSC, etc.
You can claim deductions on TDS on salary in areas like health insurance plans that come under this section. It allows a deduction up to INR 25,000 for taxpayers below age 60 and INR 50,000 for taxpayers above 60 years of age and an additional deduction of INR 25,000 or INR 50,000 if you pay premiums for the health plan of parents.
If you have invested in the National Payment Scheme (NPS), this section allows a deduction of INR 50,000.
If you have a savings account, interest income on it up to INR 10,000 is allowed tax-free.
You can claim deduction on tax under section 89 if you are an employee of a company, Government, local authority, cooperative society, university, association, or body. It states that if your salary/outstanding salary is charged at a higher slab rate due to a change in tax slab rate, you can claim a marginal relief for which you have to fill form 10E from the website of the IT department.
This section allows tax benefits for first-time homebuyers, who can claim tax benefits on home loan interest. You can claim up to INR 2 lakhs at the time of registering tax repayments. You should not own any residential property.
Some fields which allow tax reduction
House Rent Allowance Exemption
An employee can apply for tax reduction i.e House Rent Allowance (HRA) on the rent he paid for accommodation by providing the rent receipts to the employer as proof.
Travel or conveyance allowance is eligible only when the company doesn’t allow travel facilities. You can then ask your employer to include the travel allowance in your salary break-up so that you can ask for a reduction of TDS on salary.
If you are entitled to the medical allowance, you can claim tax exemption of up to Rs.15000 by providing medical bills, tax certificates from insurance companies, copies of the correct bank statements/passbooks as proof. E.g Mediclaim premium.
Public Provident Fund(PPF)
This scheme allows you to make small savings and earn interest with tax-free returns. It allows you to claim deduction under section 80C.
National Pension System (NPS)
It is designed to provide financial comfort after retirement and has to be submitted while filing IT returns.
You can claim tax exemption of up to Rs. 1.5 lakhs. The principal part of the EMI paid for the year can be available for deduction but to claim that, the house property must not be sold within 5 years of possession.
Sukanya Samriddhi account
Allows tax exemption of up to Rs. 1.5 lakhs under section 80C.
You can claim tax reduction of TDS on salary by providing the fee payment slips of the educational institution to your employer.
If you have made donations to charitable trusts and organizations, you can show the donation receipt to your employer to claim tax exemption.
For further details, click https://www.turtlemint.com/tax/tds-on-salary/. Thanks for reading!