Tax optimiser: How Shukla can save more than Rs 2 lakh in tax

Hyderabad-based IT consultant Sonia Shukla earns well, but more than 20% of it goes into tax because her pay structure is not tax friendly. Taxspanner estimates that Shukla can save more than Rs.2 lakh in tax if her employer gives her some tax-free perks and the NPS benefit, she invests in the scheme on her own and also takes a home loan to buy a house.

As a first step, Shukla should ask for some basic reimbursement of expenses on telephone and newspapers. She should also go for meal coupons. If she gets a telephone allowance of Rs.2,000, conveyance reimbursement of Rs.5,000, meal coupons of Rs.2,000 and newspaper allowance of Rs.1,000 per month, her annual tax will reduce by around Rs.38,000. If she also gets an LTA of Rs.1 lakh, her annual tax will reduce by Rs.31,200.

Shukla works from home, so she should also ask for a gadget allowance to compensate for the work related expenses. A monthly allowance of Rs.5,000 will cut her annual tax by around Rs.19,000.


Big tax savings are possible if Shukla’s company gives her the NPS benefit. Under Section 80CCD(2), up to 10% of the basic salary put in the NPS is tax free. If Shukla’s company puts Rs.10,320 (10% of her basic pay) in the NPS every month, her tax will be cut by Rs.38,000. Another Rs.15,600 can be saved if she invests Rs.50,000 in the NPS on her own under Section 80CCD(1b). Shukla is unable to claim HRA exemption because her husband pays the rent. The couple plans to buy a flat soon. They should go for a joint loan and claim tax benefits separately.



Paying too much tax? Write to us at etwealth@ with ‘Optimise my tax’ as the subject. Our experts will tell you how to reduce your tax by rejigging your pay and investments.

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