How to use smart benefits to increase your tax savings
Nobody likes to pay the proverbial taxman any more than they should. Just like fuel prices and politics, everyone has an opinion about it. As taxpayers, it’s important to be educated about tax and to educate those who are still strangers to the system. Many who get into the fold are young people, starting off with high pay packets, which means that they start to pay taxes immediately on their first job. They hardly care about tax deductions, to begin with. But as their careers grow and they move into higher slabs, they start to feel the pressure. Having had little or no tax education up to that point, they aren’t in a position that's best suited to maximise their tax savings. However, there’s enough incentive to start, which is worth 80,000.
Employee tax benefits
Tax benefits are provided by companies to their employees and are usually a part of the payroll system. Sometimes, these benefits are mentioned in appointment letters and other times they’re provided as options at a later stage. Tax benefits reduce the total taxable salary from which deductions are made. The lesser your taxable salary, the lesser the tax you pay - that’s the thumb rule quite obviously. But there are things about the way this works that are not always obvious. If a person who pays tax at the highest slab manages these benefits well, they stand to save at least Rs 80,000 every year on their personal income tax.
There’s more good news when it comes to employee tax benefits. The day of convention is fast falling behind. They’re being replaced by smart benefits - tax benefits programmes that are managed digitally with the focus on reducing time resource allocation for companies. These smart benefits make it a breeze for employees to sign up for and use tax benefits.
How much you can save?
Most people untrained in tax management are surprised when they realise that they can save at least Rs 80,000 on tax every year. That’s a lot of potential for companies and people to tap into, and the process can be easy if we stop thinking about tax benefits the conventional way, and look to optimise the system to suit everyone involved. There is already a change that’s taking place in this regard. Tax benefits are going digital. The new digital way is saving companies time and resources while removing the obstacles that kept employees away from opting for tax benefits. Saving tax doesn’t have to be difficult. It can be both fun and easy. But it starts with educating ourselves.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)