Income tax is an integral part of the Indian economy, providing the government with the resources to fund its social welfare programs and infrastructure projects. Income tax helps reduce income inequality and create a more level playing domain for businesses of all sizes. It also ensures that the government can meet its financial obligations and maintain economic stability.
An income tax is a surcharge the government imposes on a person's or business's income. It is the government's largest revenue source, helping fund social welfare programs, infrastructure projects, and other government services.
This article will discuss tax slabs, deductions and how employees can save income tax through traditional and modern ways.
Tax Slabs and Deductions
In India, the tax rate is determined according to the income slab they fall into. Generally, individuals earning up to Rs. 2.5 lakhs per annum are exempt from paying tax. Incomes between Rs. 2.5 lakhs to 5 lakhs are taxed at 5%, Rs. 5 lakhs to 10 lakhs is taxed at 20%, and income above Rs. 10 lakhs is taxed at 30%.
Section 24 of the Act allows taxpayers to claim deductions up to Rs. 2 lakhs for the interest paid on their home loan. Similarly, Section 80D allows deductions up to Rs. 25,000 on medical insurance premiums, and Section 80G allows deductions up to Rs. 50,000 for donations made to specifically approved charities.
Benefits of Tax Deductions
Tax deductions are a great way to reduce the tax you owe to the government. In India, taxpayers can avail of numerous tax deductions under different sections of the Income-tax Act, 1961. In addition, tax deductions can be claimed for various expenses such as medical bills, tuition fees, interest payments and more. Here are some employee tax benefits in India:
One of the most apparent benefits of claiming tax deductions is that it can help you save money on your taxes. By taking advantage of all the deductions known, you can reduce your taxable income and, consequently, lower your tax liability. And, of course, this means more money in your pocket.
You can invest more of your income and increase your savings by availing tax deductions. It can help you secure your financial future and achieve your long-term goals.
Tax deductions can help you plan your taxes more effectively. By being aware of the deductions available to you, you can plan your investments and expenses to reduce your taxable income and help you save more on taxes. A tax savings calculator is a tool used to estimate how much money can be saved on taxes by taking benefit of certain deductions, credits, and other tax breaks. The calculator typically requires users to enter information about their income, filing status, and deductions. The calculator then calculates the potential tax savings based on these inputs.
Tax Savings for Employees
The most common tax-saving investment for employees in India is the Public Provident Fund (PPF). The PPF account is a long-term investment and offers an attractive return rate. The maximum quantity that can be invested in a PPF account is Rs. 1.5 lakhs in a financial year, and the interest earned is tax-free.
Another tax-saving option for employees is the National Pension Scheme (NPS). The NPS is a government-sponsored retirement scheme that offers attractive returns with tax benefits. Employees can contribute up to 10% of their basic salary and up to 20% of their basic salary towards the NPS. In addition, the contributions are eligible for deductions up to Rs. 1.5 lakhs under Section 80 C of the Income Tax Act.
For non-traditional methods, companies can use prepaid meal cards provided by companies such as Sodexo to provide employees with meals and snacks while also providing tax savings. These cards can be used at designated food outlets and restaurants. The cost of the meals is then deducted from the employee's salary before taxes are calculated, resulting in a lower taxable income for the employee. It can help the company, as well as the employees, save on taxes. In addition, it makes the process of managing employee meal expenses more efficient and cost-effective.
Meal cards are an increasingly popular way for companies to provide tax savings for employees in India. They can help employers control costs while providing a convenient and attractive option for employees.
Sodexo’s tax-saving solutions help employees save tax by deducting expenses incurred using meal vouchers. Meal cards provide an efficient way to access India's largest proprietary meal network across 1,00,000+ unique acceptance points in 1,700+ cities. Not only this, but it also provides tax savings of up to Rs. 12,000 a year for every employee, in addition to additional savings of Rs. 8,000 through exclusive deals. Sodexo tax benefit helps you save money with meal vouchers at your favourite food places. To enhance the experience even further, the meal card is linked to SODEXO-ZETA APP, allowing users to track spends, block/unblock cards, change PIN, and view transaction history on the go.