Dand should start by opting for the NPS beenfit offered by his company. Under Sec 80CCD(2), up to 10% of the basic salary put in NPS is tax free. If his company puts Rs.5,400 (10% of his basic pay) in the NPS every month, his annual tax will reduce by around Rs.20,000. Another Rs.15,600 can be saved if he invests Rs.50,000 in the NPS on his own. At 36, Dand should opt for an aggressive allocation in the NPS and put the maximum in equity funds.
Next, he should ask his company for some basic tax-free components like conveyance, telephone and newspaper allowance. If he gets Rs.5,000 as monthly conveyance reimbursements, Rs.1,500 for telephone and internet bills, and Rs.500 per month for newspaper and periodicals, his annual tax will reduce by around Rs.17,000. Dand and his family and parents are covered by the group health insurance policy from his employer. He has also opted for a top up by paying Rs.24,000. But group covers continue only till one is employed in the company. Therefore, Dand should purchase health insurance on his own. An additional premium of Rs.21,000 will reduce his tax by almost Rs.6,600.
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