Chennai-based automobile engineer Prashanth Maruthur does not pay very high tax, but he can easily reduce it by half. TaxSpanner estimates that Maruthur can reduce his tax by almost 52% if his company offers some tax-free perks, if he opts for certain benefits in his pay, and invests in the NPS. As a first step, Maruthur should opt for the NPS benefit offered by his company. Under Sec 80CCD(2), up to 10% of basic salary put in the NPS is taxdeductible. “I have not given it enough thought,” he admits. NPS can help him save a big chunk in tax. If his company puts Rs.4,114 (10% of basic pay) in the NPS every month, Maruthur’s annual tax will reduce by Rs.10,269.
Another Rs.10,400 can be saved if he invests Rs.50,000 in the NPS under Section 80CCD(1b). Next, he should opt for meal coupons. He has not opted yet because the coupons cannot be used in small shops. However, almost all large superstores accept these food coupons. If he takes the full Rs.30,000 in food coupons, his tax will come down by Rs.6,250. Maruthur should also ask his company for basic tax-free perks, such as reimbursements of telephone and newspaper bills, and LTA. If he gets telephone and newspaper reimbursements of Rs.24,000 (Rs.1,000 per month under each head) and LTA of Rs.60,000, his tax will come down by roughly Rs.17,500. His company’s group health plan covers his family and parents for up to Rs.5 lakh. Maruthur should buy health insurance for his family and parents. If he pays an annual premium of Rs.36,000 for health insurance, his tax will be cut by almost Rs.7,500.
Source By: economictimes
