My age is 59 years old, and I work as an associate professor in a college. I receive a consolidated pay of Rs 1,00,000. How can I reduce my income tax? Under which section should I request the management to pay my consolidated salary in order to reduce my income tax? Some suggest that changing my designation from Associate Professor to Consultant could be beneficial. Please advise.
From India
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Impact of Designation Change on Tax Liability
By changing the designation from Assistant Associate Professor to Consultant, the tax liability will not change. A consultant is someone who is consulted for specific matters. They will not be available in the office or college throughout the day, week, or month. They will not follow office timings, nor will HR policies relating to leaves, taking approval from the HoD for leave, dress code, etc., be applicable to them. I understand that you attend the sessions every day, evaluate students' papers, and remain in the college until the sessions end from Monday to Friday, from the 1st of the month until the last day. Please go through a case on the same subject attached.
Salary Components and Tax Reduction
Inclusion of certain components like HRA, conveyance allowance, etc., as part of the salary may reduce your tax burden. However, these are subject to other conditions, such as if you are residing in an owned house or if your spouse is receiving HRA, then you will not get the benefit of HRA. A reasonable amount can be put as reimbursements, like fuel reimbursement, telephone reimbursements, reimbursement of books and periodicals for upskilling, etc. Normally, allowances will be part of the salary and thus taxable, but reimbursements will be excluded from the salary head. Similarly, you can also contribute to EPF.
From India, Kannur
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4526By changing the designation from Assistant Associate Professor to Consultant, the tax liability will not change. A consultant is someone who is consulted for specific matters. They will not be available in the office or college throughout the day, week, or month. They will not follow office timings, nor will HR policies relating to leaves, taking approval from the HoD for leave, dress code, etc., be applicable to them. I understand that you attend the sessions every day, evaluate students' papers, and remain in the college until the sessions end from Monday to Friday, from the 1st of the month until the last day. Please go through a case on the same subject attached.
Salary Components and Tax Reduction
Inclusion of certain components like HRA, conveyance allowance, etc., as part of the salary may reduce your tax burden. However, these are subject to other conditions, such as if you are residing in an owned house or if your spouse is receiving HRA, then you will not get the benefit of HRA. A reasonable amount can be put as reimbursements, like fuel reimbursement, telephone reimbursements, reimbursement of books and periodicals for upskilling, etc. Normally, allowances will be part of the salary and thus taxable, but reimbursements will be excluded from the salary head. Similarly, you can also contribute to EPF.
From India, Kannur
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Hi, If you are in receipt of a consolidated salary, then your salary is subject to TDS of 10% only. What else are you expecting?
Reducing Consolidated Salary
Probably, you may check with your college regarding the feasibility of reducing your consolidated salary to ₹50,000 and requesting the remaining amount in the form of voucher payment to be adjusted against different heads for accounting purposes. However, unless there is some benefit for the college management, they might not consider it. Also, cash transactions always pose a risk for the college management.
From India, Madras
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Reducing Consolidated Salary
Probably, you may check with your college regarding the feasibility of reducing your consolidated salary to ₹50,000 and requesting the remaining amount in the form of voucher payment to be adjusted against different heads for accounting purposes. However, unless there is some benefit for the college management, they might not consider it. Also, cash transactions always pose a risk for the college management.
From India, Madras
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In order to save income tax, I don't think it is advisable to accept a salary in cash. The college, especially private colleges unaided by the government/UGC, will have unaccounted funds from which they can pay remuneration in cash. However, if you accept cash, your salary for all purposes, including the computation of gratuity, will become less to the extent of accounted money. Even when you apply for a loan from a bank, what they consider as remuneration is the amount reflected in your bank account. In such scenarios, it is always better if you have a reasonable salary as reflected in the IT returns. Again, the risk of getting remuneration in cash is very high.
From India, Kannur
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From India, Kannur
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SALARY CALCULATOR & INCOME TAX.zip
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