20 ways in which salaried class employees loses money

  1. Claiming company allowances and compensatory leave – Many employees do not read the fine print of the HR policies where the details of eligibility of claiming the allowances is given. Company allowances could be for travel allowance, cash allowance, meal allowance, stay allowance, per diems, compensatory off etc.
  2. Not claiming for Income tax rebates and tax allowances – Especially freshers do not understand the eligible contributions for 80C, 80D and other allowances under section 10. These directly assist in reducing the taxable income, and one must max all the possible sections to reduce the taxable salary and taxes.
  3. Charity – Most companies come up with the charity & other schemes where they ask employees to raise funds, many times they don’t provide tax certificate u/s 80G. If you have contributed, then you should get the tax certificate to claim tax deduction or else contribute to charity of your choice at individual level where you can get tax benefit.
  4. Attendance regularization – Many times employees forget to regularize their attendance, resulting in the loss of payment or reduction in leaves and entitled leave encashments.
  5. Salary slip reconciliation – Sometimes there can be some errors in salary credits, deductions, taxes etc. Check your salary payslip every month.
  6. Reimbursement claims – Many times, employees go out of office on tours, conferences, trips etc. on personal expenses and then forget to claim the reimbursement of those expenses and end up hurting their pockets.
  7. Not contributing to retirement – Especially young employees, wish to have more in hand salary component and hence do not opt for Employee Provident Fund (EPF) scheme and Employee’s Pension Scheme (EPS) contribution. More salary component means more expenditure in most of the cases in form of more taxes and lifestyle expenses.
  8. Health insurance – Most employers provide health insurance for your immediate family and also competitive rates for your parents without waiting period. If your parents do not have their insurance then it is best to enroll with such schemes, however read the fine print as there could be co-pay clause.
  9. Preventive health check-ups – Employees do not opt for health check-ups regularly due to procrastination and timely detection of lifestyle diseases such as diabetics, hypertension etc. goes unnoticed.
  10. Subscriptions & tie-ups – Some employers have tie-ups with certain retail chain shops, gyms, hotels, etc. Many employees do not smartly utilize this benefits to gain discounts, etc.
  11. Cheaper loans and competitive interest rates – Banks and other financial services employees get benefit of subsided home loans and competitive interest rates sometimes as low as 1- 3.5% against the market rate of 8.5%. Most employees do not use that benefit for fear of lock-in period.
  12. Advance salary – Some employees do not avail the benefit of advance salary when in need, they take personal loan which is at higher interest rate, thereby losing money on interest costs.
  13. Salary accounts – Many companies have salary accounts with top banks such as HDFC Bank, ICICI Bank, Citibank etc. which provide many benefits for corporate customers, many employees do not leverage that relationship and go for costlier options.
  14. Salary structure – Before signing the acceptance letter, one should study the salary structure and do the tax planning in the form of car lease, food coupons, etc. to get maximum benefit. Some employers allow employees to choose their salary structure once Cost to the Company (CTC) is fixed. There are other insurance which employers provide like disability, accident and loss of pay which differ from organization to organization.
  15. Negotiation – Most of the employees and largely women employees, fear to ask for a raise or negotiate the salary when the offer is made or during appraisals. Some lose out of joining bonus, buy out the notice period, some on designation and certain perks associated with it like company car, driver allowance, car lease etc. which could assist in reducing taxes. Make a strong case and negotiate while on job or seeking the job.
  16. Gratuity – Gratuity is tax free component of salary which is received once you complete 5 years of service. But did you know that if the employee completes 4 years 240 days, then too, they are eligible for that payout. Read your HR policies for further details.
  17. Resignation – Some employees do not negotiate the joining period and buy out by the new employer and also do not negotiate to waive off the notice period or salary recovery from the old employer, ending up paying for notice period shortfall.
  18. Severance packages – Most employees do not negotiate for severance packages if the terms with company gets bitter and they are asked to go. You have nothing to lose, once you are out of job, understand that.
  19. Transfer of EPF, Pension accounts – Many employees do not transfer the PF once they leave the organization, as the result lakhs of rupees are gone unclaimed. Also the interest on PF stops crediting in your account after 3 years if there is no credit by your employer. Many do not know this fact. In case something happens to them, their family is deprived of their hard earned money.
  20. Retirement benefits – Some employees do not claim their retirement benefits like insurance or medical facilities, superannuation, pension, gratuity, etc.

Hope these pointers were helpful. Since you might have received your salary credit, this may assist you to make better decisions. Let me know your feedback.

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