When you work hard for your money, it’s only natural to want to increase your take-home salary. Your take-home salary is the money you receive in your bank account each month after deductions. The deductions include taxes, PPF (public provident fund), general tax, etc.
However, as a salaried employee in India, you almost certainly wind up paying a significant portion of your paycheque in taxes. The good news is there are some proven methods to restructure your income package to keep more of your hard-earned money while paying less in taxes. Keep reading to check them out!
9 Tips on How to Increase Take Home Salary
Let’s stop fantasising about a rise and start making it happen. Here are 9 practical strategies to help you increase take-home money.
Restructuring of CTC:
The total amount of money a company spends on you, including basic salary, bonuses, and benefits, is considered CTC or “Cost to Company”. Earlier, employers used to calculate salaries based on these components according to their policies and convenience. However, nowadays, many firms offer the liberty to you to restructure your salary.
So, you can request your HR department to change your CTC to include more allowances and fewer taxable components. This reduces the amount of tax you have to pay and increases your take-home salary.
Using Favoured Tax-Saving Options:
Several tax-saving options are available to help you minimise your taxable income while increasing your take-home pay. You might consider investing in Public Provident Fund (PPF), National Savings Certificate (NSC), Unit Linked Insurance Plan (ULIP), Equity-Linked Saving Scheme (ELSS), and other popular choices.
You may save a lot on taxes if you invest in these options. So, you must investigate these possibilities and make the most of your hard-earned money.
Leveraging Employee Provident Fund (EPF):
Your employer offers a tax-free investment option called the Employee Provident Fund (EPF). A certain percentage of your salary is deducted and invested in a savings account. It is a type of retirement benefit scheme. But here’s the best part: By increasing your EPF contribution, you can reduce your taxable income and increase your take-home salary.
So there’s no reason not to consider boosting your EPF contribution and enjoying a little extra cash in your pocket.
Taking HRA Exemption:
Here’s some good news! You may get an HRA (House Rent Allowance) exemption if you rent a property and work for a living. What’s more, by doing so, you can reduce your taxable income while increasing your take-home pay.
HRA is a significant component in calculating salary, sometimes close to 50%. So, don’t pass up this chance to save some money!
Caliming Leave Allowance:
Your employer may provide you with a tax-free leave allowance up to a specified amount. By taking advantage of this exemption, you may be able to reduce your taxable income while increasing your take-home pay.
It’s worth investigating this perk and speaking with your HR department to discover how you can take advantage of it.
Opting of Voluntary Provident Fund (VPF):
A voluntary Provident Fund (VPF) is a company-provided investing option in which employees can voluntarily pay a portion of their salary to their Provident Fund account.
You may boost your Provident Fund contribution, lower your taxable income, and improve your take-home pay by choosing VPF.
Taking Advantage of Reimbursements:
You may considerably increase your tax rebates by utilising expenditure reimbursements inside your firm. Telecom costs, petrol expenditures, food coupons, and even driver fees are some of the common reimbursements.
Many organisations cover your mobile phone costs on a post-paid plan. These are just some examples of using expenditure reimbursements to lower your tax liability.
Aiming for a Higher Basic Salary:
Your basic salary is taxable and the basis for calculating your salary. Your basic pay is also used to compute your House Rent Allowance (HRA), Gratuity, and Provident Fund (PF).
By increasing your basic salary, you can reduce the amount subject to tax while maintaining your take-home income. Consider talking to your HR regarding this.
Using Tax-Free Allowance:
Did you know that some businesses provide tax-free benefits to their employees? Telephone and internet allowances, food allowances, transport allowances, and other benefits are examples of these allowances.
You may cut your taxable income and take home more of your hard-earned salary by taking advantage of these advantages. Enquire with your HR department whether your company offer such allowances.
In conclusion, increasing your take-home salary requires a bit of planning and strategy. By leveraging tax-saving options, restructuring your CTC, and taking advantage of exemptions and allowances, you can reduce your taxable income and increase your take-home salary. Remember, every little bit counts, so take the time to review your salary structure and see where you can make changes to get maximum money in your paycheque.
