By working with your employer to restructure your CTC usefully, you can increase your in-hand income while lowering your tax.

For salaried persons, there’s no escaping from the taxman. You pay TDS on your salary all year. Recently, while filing your tax returns, you may have had to unexpectedly cough up even more taxes thanks to your investments, other income sources, capital gains etc. How can you avoid this heartburn? Here are a few ideas.

TWEAK YOUR CTC

Is your current compensation tax-efficient? Your salary may be structured in a manner that requires you to pay higher taxes. For example, there may be no food coupons in your compensation. You can receive monthly food coupons to reduce your taxable income. By working with your employer to restructure your CTC usefully, you can increase your in-hand income while lowering your tax.

BUY TAX-EFFICIENT INVESTMENTS
Reduce dependence on investments where returns are fully taxable. For example, interest earned on fixed deposits are fully taxable as per your slab. So a 7% FD gives you 4.9% if you are in the 30% tax slab. Instead, you could invest in tax-efficient instruments. PPF is fully tax-exempt. Equity investments (stocks or mutual funds) have a low tax rate of 10% on Long Term Capital Gains over Rs 1,00,000. With tax-efficiency in investments, you save more and achieve your money goals faster.

EXAMINE AVAILABLE SECTIONS
Beyond commonly known sections of the Income-Tax Act such as 80C and 80D, there are plenty of little-known sections and sub-sections that you may not have explored but which may help you save some more tax. For example, there is 80DD, which allows you to claim tax cuts for expenses incurred on the medical treatment of a handicapped, dependent relative. Section 10(14)(i) allows you tax cuts for purchase of uniform worn during employment. Ensure you're aware of all the deductions available to you, and maximise your tax savings.

USE HRA WELL
The HRA component of your salary may remain unutilised under certain circumstances. For example, you live in a home owned by your parents and do not pay rent. However, you can pay rent to your parents and claim HRA deductions as per norms. Remember that this income is taxable in your parents’ hands.

TAKE HOME LOAN

Taking a home loan is one of the top ways to save tax. You can cover your Section 80C limit of Rs 1.5 lakh just by repayment of principal and an additional Rs 2 lakh for interest paid under Section 24b. If you take a home loan jointly with a family member, those limits apply individually to each borrower.

INSURE YOUR PARENTS

You can claim tax cuts through investments not just for yourself, spouse and children, but also for dependent parents. Under Section 80D, you claim tax cuts for premiums paid towards health insurance. You can purchase health insurance for your parents for additional tax cuts. If both your parents are under 60, you can claim up to Rs 25,000 against health insurance premium. If either of them is over 60 years, you can claim up to Rs 50,000.

The writer is the CEO of BankBazaar.com