Smart Hacks To Increase Your Take-home Salary Take-home salary, also called net salary, is the amount received after deducting income tax, EPF contributions, and professional tax from the gross salary

It is always a task for salaried individuals to get the maximum take-home salary. The statutory deductions and income tax amount affect the take-home salary. Take-home salary, also called net salary, is the amount received after deducting income tax, EPF contributions, and professional tax from the gross salary.

It means: "Take-home salary = gross salary - income tax - EPF contributions - professional tax - other deductions (if any)'.

Invest in tax-saving instruments

As we can see, decreasing the income tax amount may help increase the take-home salary. This can be done by maximizing investments in tax saving investments. Hence, a salaried individual can focus on making tax-saving investments. It can be done as below:

Investment in tax-saving investments for Section 80C deductions: It is

important to take all the benefits of Section 80C deductions under which you can take up to INR 1.5 lakh deduction. Simply by incurring expenditures like life insurance premium, school tuition fees and hostel expenditure of children, or by Investing in the eligible tax saving instruments like Equity Linked Tax Saving Scheme (ELSS), National Pension Scheme (NPS), Public Provident Fund (PPF), Employee Provident Fund (EPF), tax saver fixed deposits, National Savings Certificate, etc., one can reduce the tax outgo to a certain extent.

Pay medical insurance premium (Section 80D)

The amount paid towards medical insurance premium for self, family and dependant parents can be claimed as a deduction under Section 80D.

The deduction allowed for mediclaim is as follows:

• Up to INR 25,000 deduction for health insurance premiums paid for self/spouse or dependant children
• A separate deduction of up to INR 25,000 for health insurance premium paid for dependant parents (below 60 years).
• If health insurance premium is paid for senior citizens, the deduction allowed is INR 50,000 instead of INR 25,000
• Health checkups of INR 5,000 are also allowed and covered within the overall limit.
• Deduction up to INR 50,000 for medical expenditure towards senior citizens if they are not covered under any medical policy.

Your employer may pay a health premium on your behalf and deduct its amount from your salary. Such premium is also eligible for deduction under Section 80D.

Invest in NPS (National Pension Scheme): Also, the government has provided an additional benefit of INR 50,000 by investment in NPS. You can claim this deduction over and above the Section 80C limit of INR .5 lakh. Apart from the employee's contribution, if the employer also contributes to the employee's NPS account, the employee can claim up to 10 per cent of basic salary (14 per cent deduction is available for central government and state government employees). Hence, NPS can give you dual benefits of investing cum tax savings.

Interest on home loan (Section 24 and Section 80C): Homeowners can claim a maximum deduction of INR 2 lakh on interest on home loans for self-occupied property. However, if the home loan is taken on the let-out/rented house property, the taxpayer can take a deduction of the entire interest amount. In addition, the principal component of the housing loan is allowed under the overall limit of Section 80C.

Deduction for education loan for higher studies (Section 80E): Education loans taken for higher studies can also be claimed as a deduction. However, the loan should be taken from a bank or a financial institution for pursuing higher studies (in India or abroad). An individual can avail of this benefit for education loans taken for self, spouse, or children.

One may begin claiming this deduction starting from the year the loan repayment begins and up to the next seven years (i.e. a total of 8 assessment years). Even a legal guardian could avail of this income tax deduction.

Restructure your CTC

Apart from tax savings, you may consider restructuring your CTC so that it includes maximum amounts for tax-saving reimbursements. Allocating amounts under house rent allowance, transport allowance, food coupons, etc. Most employers already offer HRA and LTA components which are also a great tool for tax saving. If not, please discuss with your employer to incorporate these components in your salary for maximum tax saving benefit.

Food coupons: Many employers offer the facility to provide meal coupons like Sodexo. These food coupons are considered as perquisite in the hands of the employee. However, Income-tax Act allows tax-exemption up to INR 50 per meal on them.

The exemption is available for 22 working days and two meals a day, resulting in a monthly benefit of INR 2,200. Accordingly, the yearly exemption works up to INR 26,400. If you fall under the 30 per cent tax slab, you can save tax up to INR 7,920 per annum.

Mobile, books and periodicals, Internet reimbursement: Ask your employer to include these reimbursements as a part of your CTC. You can claim tax-free reimbursements by submitting bills of mobile, Internet, books and periodicals.

Children allowance/Hostel allowance: The employer may provide you education allowance or a day boarding hostel /hostel allowance for your children as part of your salary. Such allowance is exempt from tax. The amount can only be claimed for two children. A sum of INR 9,600 exemption amount is allowed towards education and hostel expenses for two children. If you incur these expenses, there is no harm in submitting their proofs. Including these in your salary can give you some additional bucks.

House rent allowance (HRA): A salaried individual living on rent and getting HRA as a part of salary can claim a tax deduction on HRA. According to the HRA rules, this could be totally or partially exempted from income tax (you can use the HRA calculator to check your exemption). However, if you don't live in any rented accommodation, your HRA component of salary will be taxable.

Also, you can claim HRA exemption even when you live with your parents. You can submit the rent agreement and rent receipts to your employer and make sure that your parents report the rental income in their return of income.

Leave travel allowance (LTA): The income tax law also provides for an LTA exemption to salaried employees for domestic travel expenses incurred during leaves taken by them. One can claim LTA twice in a block of four years. If the exemption is unused within a block, they could carry the same to the first year of the next block.

LTA only covers domestic travel and not the cost of international travel. Also, the mode of such travel must be railway, air travel, or public transport. Please note that the exemption doesn't include costs incurred for the entire trip, such as food expenses, entertainment, lodging, etc.