Now that both houses of Parliament have passed the Finance Bill 2014, you can start taking advantage of the new tax proposals of Budget 2014-15. Revisit your tax-saving strategy for the year to maximize your take-home pay.
Reduce your tax outgo
Most organizations have already asked their employees to send revised investment declarations for the year to reassess their tax liabilities following the changes in tax laws. The sooner you do so, the better it will be.
"If you do not revise your earlier declaration, you will continue facing a higher tax outgo every month. Sending a revised declaration this month will allow you to fetch a higher take home pay right away," says Kuldip Kumar, executive director, tax & regulatory services, PWC.
Let us illustrate this with an example. Rasika, an employee with a software company, earns Rs 40,000 per month. Based on her earlier investment declaration, her tax deducted at source (TDS) would be Rs 18,540 annually, or Rs 1,545 per month.
However, now that she intends to file a revised tax declaration, making use of the additional Rs 50,000 benefit under the new tax structure, her total liability will work out to Rs 8,240 for 2014-15.
Given the fact that she has already paid Rs 7,725—Rs 1,545 x 5 (months) — as tax till date, she will have to pay Rs 515 over the remaining seven months. Therefore, from October, her TDS will be Rs 74 and she will save Rs 1,471 per month
Source: The Economic Times