Thiruvananthapurambased software professional Sruthi Suresh pays a high tax because her pay structure is not very tax friendly and she does not claim all the deductions available to her. Taxspanner estimates that Suresh can save nearly Rs.63,000 in tax if her company rejigs her salary package, she opts for the NPS benefit from her company and buys health insurance for her family and parents. Suresh does not get any tax-free perk, except the LTA. Although her company does not allow any rejig of the pay structure, she should explore the possibility of some basic perks, such as telephone and newspaper bills and meal coupons, getting included in the package.
A newspaper allowance of Rs.1,000 per month, telephone bill reimbursements of Rs.1,000 per month and meal coupons worth Rs.24,000 can reduce her tax by roughly Rs.15,000. Suresh’s company offers her the NPS benefit, but she hasn’t opted for it. “I already invest Rs.3,000 a month in NPS but don’t know how the pension scheme works through the employer,” she says. Under Sec 80CCD(2), up to 10% of the basic salary put in the NPS on behalf of the employee is tax free. If Suresh’s company puts Rs.6,241 (10% of her basic) in the NPS every month, her annual tax will reduce by more than Rs.23,000. Another Rs.5,000 can be saved if she increases her investment under Section 80CCD(1b) to Rs.50,000. More tax can be saved if Suresh buys health insurance for her family and parents. A premium of Rs.60,000 for medical insurance will reduce her tax by nearly Rs.19,000.
Source By: economictimes
