A company or person making a payment is required to deduct tax at source if the payment exceeds certain limits, according to the Income Tax Act. Tax Deducted at Source (TDS) has to be deducted at the rates set by the tax department.
The company or person that makes the payment is called a deductor and the company/person that is receiving the payment, on the other hand, is termed as the deductee. It is the deductor’s responsibility to deduct TDS and deposit the same with the government.
One of the best ways to avoid getting your salary cut is by investing in eligible tax-saving schemes. One should try and claim as much of tax benefits as possible under Section 80C.
Some of the ways to avoid paying TDS could be investing in PPF (Public Provident Fund), NPS (National Pension System), ULIP (Unit-linked Insurance Plans), Sukanya Samriddhi Yojana, Tax Saving FDs, ELSS Equity Funds. Copies of payment of school fees receipts of your children carrying the schools’ seal are also tax-deductable.
Under Section 80C one can additionally save up to Rs 1.5 lakh every year for both self-occupied and let-out properties.
Employees are also allowed to claim tax exemption for expenses incurred for travelling when on leave anywhere in the nation as LTA is a part of an employee’s total CTC.
Section 80EE allows tax benefits to first-time homebuyers. They can claim tax benefit on home loan interest. This deduction of over Rs 2 lakh is tax deductible under Section 24.
People living in rented houses can also claim the House Rent Allowance (HRA) exemption. The HRA allows individuals to lower their taxes partially if one is staying in rented accommodation. The allowance is for expenses associated with rented housing only and one can claim them by submitting Rent receipts, etc.
Additionally under Section 80D, one can claim a deduction of up to Rs 25,000 for the medical premium paid for self, dependent children, and your spouse in a single financial year.
One can also consider investing under the National Pension Scheme (NPS) and also get tax deductions on donations.