Minimizing your tax bill

There is tax free income and then there is reducing your taxes on your existing income. The motherly scheme for minimizing your tax is section 80C which we covered in one of the earlier posts. There by you can reduce your taxable income by 1 lakh and thus reduce your tax burden lot. Then there are other things provided generously by the government (provided your company supports them)

* Medical bills (for you and your dependents in family) upto 15,000 per year can be claimed tax free
* Leave travel allowance upto 20,000 per year (this is allowed for two years in every four year block as announced by govt.) for you and your family. The bills allowed are only for travel (economy class airfare or second class a/c) within country (and not stay, food).
* Food allowance of daily Rs.50 for 22 working days a month (1100 per month) - this is given as a subsidy of food by the company or as food coupons (sodexho, ticket restaurant)
* Conveyance allowance of max 800 per month (or actual travel expense claimed or company provided transport/car)
* House Rent Allowance (40% of your basic salary OR the rent you paid over 10% of your basic salary, which ever is less)
* Interest against home loan (max of 1,50,000)
* Gift given by your company (max of 5,000)
* Education allowance for your children
* Contribution to prime-minister's relief fund

Other things which you can deduct from your tax while filing are
* Your contribution to recognized tax exempt charity organizations