FinanceBusiness

5 Practical Ways To Reduce Income Tax This Financial Year 2022-23

The fiscal year 2022–2023 will conclude in just three months, so it’s critical to understand how to submit an Income Tax Return (ITR) for FY23 in a way that maximizes your ability to claim exemptions.

1. Books and Periodical Allowance

The books and periodicals allowance covers the compensation of costs incurred for the procurement of books, magazines, newspapers, etc. Employees may request an exemption up to the CTC or cost to the business, maximum, or their exact bill value, whichever is smaller.

2. Leave Travel Allowance

Taxpayers are entitled to a deduction for the cost of tickets purchased for domestic travel within India. The Income tax-payer’s families may also claim deductions for their travel costs. Under LTA, employees are only allowed to use the benefit once every four years.

3. Relocation Allowance

Both businesses and government organizations have the right to ask their employees to move to a different place for work-related reasons. The employer is excluded from paying income tax on payments made for the first 15 days of lodging, train or airplane fares, and also car transportation expenses, packaging fees, and registration fees.

4. Tuition Fees and Child Education Allowance

For tuition as well as childcare expenses, salaried workers are eligible for tax exemption. A maximum of 2 children’s monthly education allowances of Rs 100 are exempt from paying taxes, and under Section 80C, payments made for the education of up to 2 children are eligible for exemptions of up to Rs 1.5 lakh.

5. House Rent Allowance

For the vast majority of employees, the House Rent Allowance (HRA) is a part of their compensation. However, HRA is not deductible, unlike base pay. The HRA deduction value is deducted from the total earnings before determining gross income tax liability. The HRA that an employee receives from their employer is entirely taxed if they own their home outright or do not pay rent. A salaried worker who resides in one of the major cities is entitled to a 50% HRA deduction.

Subhashree Panda

Subhashree Panda: A proficient content writer, editor, and researcher. With 4 years of experience and an MBA in finance, she crafts compelling narratives on global events. Her passion for diverse journalism genres resonates widely, fostering broad audience connections.

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