Additional Tax Saving - Salaried

This post will help salaried persons to save a good amount every year. 90% of the companies have TDS facility where the employer deduct tax during salary, before that they ask for employees investment declaration beginning of every financial year. Idea is when employer asks for investment, declare everything like 1L investment limit, house rent to the max, 1.5L home loan principal, Loss from let out property etc etc which will bring down your tax to Rs.0. This way employer does not deduct tax from your salary. Now when employer asks for proofs of your declaration during financial year end, simply submit the proofs of whatever investment you have done really. This will force the employer to recalculate the tax and deduct it only during feb and march, ofcourse this could take away your whole month salary too :)

Savings: Consider your tax per month is Rs.2000. When you declare everything as told above, employer does not deduct that Rs.2000 pm, which you have to invest in an Recurring Deposit from either post office or reputed banks which will yield an interest of 7%. Rs.2000 for 10months in RD for 7% interest

Month	Deposit	Interest	Total
Apr	2000.00	119.78	2119.78
May	2000.00	107.48	2107.48
Jun	2000.00	95.26	2095.26
Jul	2000.00	83.11	2083.11
Aug	2000.00	71.03	2071.03
Sep	2000.00	59.02	2059.02
Oct	2000.00	47.08	2047.08
Nov	2000.00	35.20	2035.20
Dec	2000.00	23.40	2023.40
Jan	2000.00	11.67	2011.67
TOTAL	20000.00	653.03	20653.03

So Jan month end you will have Rs.653.03 addition to your regular tax of Rs.20000. Now during Feb and Mar when your employer deducts tax, you can coooooly pay Rs.20000 from your RD and end up saving Rs.653 additionally.

Happy Savings :)