Bengaluru-based media professional Shefali Sahay earns well, but almost a fifth of her salary goes in tax because she doesn’t claim all the deductions available to her. Taxspanner estimates that Sahay can reduce her tax by more than Rs.1.5 lakh if she opts for the NPS benefit offered by her company, invests in the scheme on her own as well, and claims HRA exemption by paying rent to her mother. She also needs to buy health insurance for herself. Sahay should start by opting for the NPS benefit offered by her company. Under Sec 80CCD(2), up to 10% of the basic salary put in the NPS is tax-free. If her company puts Rs.6,375 (10% of her basic pay) in the NPS every month, her annual tax will reduce by Rs.24,000. Another Rs.15,600 can be saved if she invests Rs.50,000 in the NPS on her own. At 43, she should opt for a balanced allocation in the NPS.
Next, she should pay rent to her retired mother and claim exemption for HRA. If she pays Rs.25,000 rent to her mother every month, she can claim exemption for Rs.2.68 lakh. This will cut her tax by almost Rs.84,000. The Rs.3 lakh rent received by her mother will be taxed after 30% standard deduction. Sahay should also ask her company to rejig her salary structure and pack in some tax-free perks. If she gets food coupons worth Rs.2,000 per month and gadget allowance of Rs.60,000 in a year, her tax will reduce by around Rs.24,000. Sahay is covered by group health insurance from her company, but this may not be enough and she should buy a cover for herself. A premium of Rs.7,000 will reduce her tax by Rs.2,200.
Source By: economictimes
