Employees are eligible for various tax benefits, depending on their circumstances. These include deductions for medical expenses, charitable donations, and retirement savings. Additionally, employees may qualify for deductions for certain work-related expenses, such as job-related travel, meals, and entertainment. This article will discuss the need for tax savings and tax savings through conventional and non-conventional methods.
Need for Tax Savings
As an employee, you can either opt for conventional saving tax methods or look for non-conventional methods. Tax savings are essential for employees to keep more of their hard-earned income for their use. In addition, tax savings strategies can help reduce their taxable income, decreasing the income tax owed to the government. Employees can also take advantage of tax deductions and credits to reduce their tax burden. There are two ways of tax savings for employees
: Conventional and non-conventional.
5 Conventional Ways of Saving Tax
Conventional ways of saving tax include investing in the National Savings Scheme, contributing to an employer-sponsored retirement plan, Investing in tax-free investments, and making charitable donations.
- Invest in Tax Saving Instruments: Investing in tax saving instruments such as Public Provident Fund (PPF), National Savings Certificate (NSC), Equity Linked Savings Scheme (ELSS), and Insurance products like ULIPs and pension plans can help you save tax. For example, consider the difference between investing in the National Savings Scheme and the Public Provident Fund (PPF). A sum of one lakh invested in PPF for 15 years will grow to 2.75 lakh as opposed to 2.07 lakh in the National Savings Certificate (NSC), representing a 32% increase in absolute value.
- Avail Tax Exemptions Under Section 80C: You can avail of tax exemptions under section 80C of the ITA (Income Tax Act) up to a maximum of ₹1.5 lakhs. It can be done by investing in tax-saving instruments such as PPF, NSC, ELSS, etc.
- Invest in Tax-free Bonds: Tax-free bonds such as Infrastructure Development, Rural Electrification, and IRFC bonds can help you save tax.
- Contribute to Health Insurance: Under section 80D of the Income Tax Act, you can avail of tax deductions up to ₹25,000 for health insurance premiums paid for yourself, your spouse and dependent children.
- Donate to Charities: Donations made to specific charitable organisations are eligible for tax deductions under section 80G of the Income Tax Act.
Apart from this, if you have taken a home loan, the interest paid on it is eligible for tax deductions under section 24 of the Income Tax Act.
For unconventional tax-saving methods, employees can use a credit card with a rewards program to pay taxes. There are tax rebates for people paying taxes with credit cards. They can also take advantage of tax-advantaged savings accounts, invest through parents and pay them to rent for housing allowance. Let's discuss ways to save taxes while maximising the benefits of Sodexo meal vouchers and gift cards. Sodexo meal cards: As an employer, use gift cards, meal pass, and multi-benefit pass to help your employees to save taxes on food, gifts, and more. Sodexo meal pass is a convenient and cost-saving way to purchase meals. In addition, they provide employees tax benefits
and are accepted at many different restaurants, cafeterias, and food vendors. Benefits of Sodexo meal pass include:
- Savings: Sodexo meal pass often offer discounts on meals purchased with them so that you can save money on your meals. Sodexo tax benefit can save up to 12000 annually for employees.
- Convenience: With the Sodexo meal pass, you don't have to worry about carrying cash or a credit card. You can use your pass to pay for your meal, making it easier and faster to pay.
- Variety: Sodexo meal pass is accepted at many different restaurants, cafeterias, and food vendors, so you can easily find something to eat no matter where you are. Sodexo services can be found at 5 million+ merchants PAN India with offline and online stores.
- Flexibility: These passes are multi-benefit and can be used for meals, snacks, and beverages, so you can use them for whatever food you need.
- Security: Since the Sodexo meal pass is not linked to a bank account or credit card, you can use them without worrying about fraud or identity theft.
As an organisation willing to save money, you can provide Sodexo meal vouchers for employees. It helps maintain employee loyalty and satisfaction. Employees in India are given Sodexo Meal Coupons primarily to take advantage of tax rebates. It is approximately INR 2,000 in India. For example, per the tax savings calculator
, if you choose Rs. 2000 in meal coupons per month, the Rs. 2000 is not taxed. However, if you decide to take 2000 as a salary supplement, it will be taxed and credited to the employee's account. (If tax is 20%, Rs.1600 will be received). With Sodexo tax savings, you can improve employee satisfaction and add value to your employees’ lives.