Do you think that you have a good salary but you are not going to get the maximum take-home salary from your CTC? I have seen many people are complaining that they are not happy to pay huge money on income tax and due to that they are getting less amount of take home salary.

CTC or cost to company has many components and many people don’t use them properly to save maximum income tax. Personally in y early days of career, I was also looking for various opportunities to save tax and they are nothing but our so called typical income saving options which I will share in a separate article.

In this article, I will share how you can make the most out of your CTC or salary package and save tax on salary to get max take home. There is no hidden truth, but I will say a very basic awareness only which can help you to save your hard earned money.

5 Ways To Save Tax from Your CTC Smartly

Before proceeding further, I will ask you one simple question. Do you know each & every single break up of your CTC or salary package? If not then this is the best time to check the same and try to find out whether there is any option to save tax on salary.

1. Reduce Your Basic Salary Component

These days almost every employer is providing the facility to declare the salary components to their employees only so that everyone can choose as per their need. You might have seen that your default basic salary is set quite high and there are other allowances where you can keep some amount.

The Basic Salary component is 100% taxable. And according your EPF contribution will also increase and your take home salary will decrease. But if you don’t know where else you can put your money to save tax, then there is no point to reduce the basic salary as well. Anyway, here the point is to reduce the basic salary component and in the next points we will find where else we can put this money to save more tax.

2. Don’t miss any of these Basic Income Tax Exemptions:

I have seen many people just think that only 80C investment options are the only way to save income tax. But this is totally wrong. There are various ways one can save tax just doing little changes in their CTC only. Here are the list of them :

  • HRA/ House Rent Allowance: If you are staying in a rented accommodation, you are liable to get income tax benefit on the rent paid amount. There is calculation to find out your HRA limit that I will share separately.
  • Conveyance Allowance: You are eligible to claim an amount of Rs 1600 per month as conveyance allowance and for that you don’t have to submit any bills.
  • LTA or Leave Travel Allowance: I am sure you might be travelling to your home town or any place in India or abroad with your family. As LTA rules, in every 4 travel year, you can claim 2 travel bills as per the limitation and you will get the income tax benefit for the same.
  • Medical allowance: Every year you can claim Rs 15,000 of your medical expenses and get income tax benefit.

3. Use the company allowances to the max

If you are an IT professional like me or any employee then you might be aware about various allowances companies are providing to their employees. Even though I have seen many people not utilizing the same providing their own reasons. I am not telling that they are wrong, what I am trying to say here that I am looking for every single opportunity to save income tax on my salary.

If you are also thinking like me, then you should not miss to take ticket restaurant coupons or sodexo coupons [Monthly exemption limit 3000/month ], free medical cheak-ups annually, mobile/telephone/internet bill reimbursements etc. I am not aware much about other allowances like petrol allowance, car lease policy etc as I have not yet experienced with them.

4. Plan for Your Retirement & Save Tax

Do you think extracting the maximum take home salary is the best thing to do? I believe no. It is always better to use the entire salary smartly so that you can get maximum benefit now and also secure your future. Because this is the time you are earning and you have to make sure you can save more to live a similar life in future also, that means in you retirement as well.

If you have your own plan to save for your retirement than it’s fine. But if you think how to build your retirement corpus from your salary only, then right now there are 2 ways to do that.

  • EPF/ Employee Provident Fund: You can increase the contribution in your EPF without increasing the basic salary component. Simply use the VPF or voluntarily provident fund and save for your future. EPF is one of the most popular & safe investment option to save for retirement so far.
  • NPS or National Pension Scheme: Govt is trying to promote more about NPS which has mainly designed to build your retirement corpus. If you are a private company employee, then NPS may not be mandatory for you but for all Govt employees it is mandatory like EPF. You can invest more in NPS and also get additional income tax benefit.

5. Look Beyond Section 80C To Save Income Tax

As I have mentioned once, many people think that one can only save income tax through section 80C only. For all of them, let me tell that there are various other sections through which one can save tax. Here are few of them

  • 80D-Health Insurance Premium Paid for your parents, family
  • 80DDB – Treatment of critical illness
  • 80E – Interest of Education Loan
  • 80GG – Don’t get HRA, then claim your house rent
  • 80TTA – Interest earned on Savings Account
  • 80EE – Home loan interest Additional Deduction

So, do you really utilize every single benefit your company is providing to save tax? It may not require all the time for you to use everything for the sake of saving tax. You have to do your own calculation and find your requirement to avail the facility before saving tax. I would love to hear from you about your experience while re-structuring your CTC or monthly salary and how much money you have saved on income tax. Please share your thoughts here by writing a simple comment below.


    • I think it is not bad to pay tax at the end, the important factor is one should not do tax planning in hurry to void bad investments. Thanks for finding this useful.

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