When Ajay Sarma took the offer to join a new company, he was quite happy with the cost-to-company salary that was offered to him. However, after the first month, when the salary cheque came, he was shocked with the numbers. His actual take-home was slightly more than his previous salary.

Sarma is not alone. There are many of us who get lured with the numbers that show in our CTC package, but when the actual take-home salary comes in our hand, it causes a lot of heartache. It is therefore very important that when you are negotiating the salary, you should have a clear idea about numbers.

A good way to achieve this is by using tax saving strategies that would reduce your burden. Ah! those slips that snip The first thing to look for is the different heads in your salary package.

Heads like performance incentive sound challenging, but they are always taxed. Special allowances, added with conveyance and phone reimbursement, also attract tax.

Often, there is a notion among salary-earners that a lesser basic pay and high allowances may bring down income tax burden. However, it is best if you avoid this approach. A reduced basic salary leads to a lower provident fund, which is a forced saving for your future.

Anyone who gets many allowances must combine all of them under a single head. Put car allowance, house rent allowance, office travel allowance, phone, vehicle and staying in hotels under on head, which straight away lowers your tax.

Call this consolidated allowance. Allowances that help Always go for conveyance allowance. A sum of Rs 800 a month is tax-free. Even if your office does not give conveyance allowance, you can ask for a reduced basic pay and additional conveyance allowance. This move can cut down tax outgo.

Daily allowance, wherever allowed, must be grabbed with both hands because it carries total tax exemption. Professional tax, up to Rs 2,500, is also unencumbered by tax. Also, office loans for car or personal reasons can be used to avoid taxation to a great extent.

Policies that pay Employees State Insurance Scheme, if available, must be compulsorily availed. Unlike LIC schemes, the amount is absolutely free from income tax. Even if you are contributing to a Public Provident Fund, a salaried individual must also opt for Employers Provident Fund, because this also doesn`t attract tax.

Many salaried people are unaware that a loan for medical treatment is exempt from income tax under Rule 3 A, but make sure that your medical insurance policy is not utilised. Perquisite tax can be avoided if you own a car and the company pays for maintenance and petrol bills.

The most profitable way to claim HRA is to ask the company to take a house on lease, which is owned by any of your relatives. If it`s your parents, who don`t have any income, it works completely to your advantage. It is because, on one hand, you claim HRA and they, having zero income, don`t have to pay any tax. In fact, even if they have some income, but less than the stipulated base limit of Rs 220,000 a year (assuming they are retired), they would gain from the situation.