Starting a New Job in July: How to Navigate Income Tax Deductions and Save Money

Hi Experts, I will be joining a company this coming July. I have a few queries on income tax, specifically TDS.

Income Tax Deduction from Salary

1) Will the company deduct income tax from the salary starting from the very first month? If so, how can one save under various saving schemes and reclaim the income tax deducted? Filing for income tax reimbursement from the Income Tax Department can be a cumbersome process, so I would like to know how I can reclaim the income tax from the company itself.

Tax-Saving Schemes

2) Is there a provision where one can pledge to the company that he/she would save Rs. X under a tax-saving scheme?

Thanks

You can definitely save on your taxes. First, you have to go through your salary breakdown and understand the components. There will be tax-saving elements like Basic, HRA, Conveyance, Medical reimbursement, LTA, etc. Based on these components, you can plan your tax savings.

Investment Declarations

Every company requests investment declarations at the beginning of the year. This is essentially a commitment from the employee that they will invest in savings under certain categories during the financial year. These investment declarations will be taken into account, and taxes will be calculated accordingly. By the end of the year, you will be required to submit proof for the investment declarations made at the beginning of the year. Failure to provide this proof may result in tax liabilities.

Tax Deduction Practices

Some companies divide the tax into 12 parts and deduct it monthly, while others, like government organizations, deduct it in the last two months of the financial year.

Thank you.

Bhandavi is right. Investment projections are subject to change at the end of the fiscal year, and the differential tax liability will be adjusted in the last three months' salary. Any excess deductions can be claimed while filing income tax returns.

Pon