Is it good to have more basic salary or less?
Basic salary is always taxable and should, therefore, not be more than 40\% of the cost to company. However, it should also not be kept too low since it will then result in reduction in the other constituents of the salary.
What is the best salary structure to save tax?
Deduction u/s 80D
| Conditions | Premium Paid | Deduction u/s 80D (Rs) |
|---|---|---|
| Parents above 60 years and individual and his family less than 60 years | 25000 | 75000 |
| Both individual, his family, and parents are more than 60 years | 50000 | 100000 |
| Members of HUF | 25000 | 25000 |
| Non-resident individual | 25000 | 25000 |
Which is best tax saving method?
Recommended ways of saving taxes under Sec 80C,80D and 80EE
- Make an investment of Rs 1.5 lakh under Sec 80C to reduce your taxable income.
- Buy Medical Insurance, maximum deduction allowed is Rs.
- Claim deduction up to Rs 50,000 on Home Loan Interest under Section 80EE.
What are tax saving options for salaried?
10 Tax Saving Options for Salaried Employees
- Employee Provident Fund. Employee Provident Fund is one of the most popular ways of tax saving for salaried people.
- Public Provident Fund.
- Equity Linked Savings Scheme.
- Life Insurance.
- ULIPs.
- Rental Accommodation.
- National Pension Scheme.
- Health Insurance.
Can basic be more than 50 of CTC?
As per the new wage code, allowances given to employees should not exceed 50 per cent of the CTC. This means that the basic pay of each employee has to be at least 50 per cent of CTC.
How can I increase my hand salary?
The first step is to add all the allowances after considering the taxability of each allowance. For instance, HRA and Conveyance Allowance is partly exempt and partly taxable in the hands of the employee. For the sake of simplicity, we will assume here that HRA and Conveyance Allowance is 50\% taxable and 50\% exempt.
How can I reduce my tax deductions?
Save Income Tax on Salary
- Deductions under Section 80C, Section 80CCC and Section 80CCD. Citizens of India can save tax under these 3 sections.
- Medical Expenses.
- Home Loan.
- Education Loan.
- Shares and Mutual Funds.
- Long Term Capital Gains.
- Sale of Equity Shares.
- Donations.
What is ideal salary structure?
We’ve also added recommended amounts to each component that should assist you in drafting an ideal salary structure. Component Recommendation : Basic- 40-50\% of CTC. DA- 5\% of CTC. HRA- 50\% of Basic + DA if metro and 40\% if non-metro.
How much tax can a salaried save?
Section 80C deduction: Claiming the entire Rs 1.5 lakh deduction available under section 80C can reduce your tax outgo by Rs 45,000, for those at the 30\% highest tax bracket, excluding the cess.
Is basic CTC 40\%?
Usually, basic salary is 40\% to 50\% of CTC (Cost to Company). Statutory components such as bonus, PF, gratuity and other benefits are determined on the basis of the basic salary. Any increase or decrease of basic salary can affect an employee’s CTC.
What are the tax benefits of a higher basic salary?
Senior employees fall in a higher tax bracket. For them, tax savings gets priority over a higher take-home salary. Hence, a higher basic salary would fetch additional tax benefits for such individuals. 2. ALLOWANCE
What is the best salary structure to save tax when switching jobs?
When switching jobs, a candidate should always consider the basic pay. It should be high enough to accommodate requirements. Experts believe that a cost-optimized and best salary structure to save tax is to have 40\% to 50\% of the gross salary as basic pay.
Is low basic pay better than high basic pay?
It is believed that individuals below the tax bracket of 30\% can benefit a lot from high basic pay. Contrary to this, individuals above this tax bracket of 30\% can benefit from low basic pay.
What happens if your basic pay is too high?
If the basic is too high, your tax liability will shoot up. Other components of salary exemptions, such as the HRA and Provident Fund benefits, are linked to basic pay. Designing a tax efficient pay structure is always a trade-off between higher take home and maximum tax benefits.