Gurgaon-based finance professional Deepak Saxena pays a low tax even though he does not claim all the deductions avaliable to him. Taxspanner estimates that Saxena can reduce his tax by nearly Rs 58,000 if he gets a few more tax-free perks, he opts for the NPS benefit offered by his company and he also invests in the pension scheme on his own.
Saxena should start opting for the NPS benefit offered by his company. Under Sec 80CCD(2), up to 10% of the basic put in NPS is tax free. If his company puts Rs 5,179 (10% of his basic) in the NPS every month, his annual tax will reduce by almost Rs 13,000. Another Rs 10,400 can be saved if he invests Rs 50,000 in the NPS on his own. At 29, Saxena should allocate the maximum 75% to equity funds of the NPS.
Next, Saxena should ask his company for reimbursements of newspaper bills and food coupons. If he gets a newspaper allowance of Rs 9,000 (Rs 750 per month) and food coupons worth Rs 18,000 per month, his tax will reduce by Rs 5,600.
Saxena has not been able to claim the full deduction under Sec 80C. At his age, he should invest in growth assets. The contribution to the PPF should be reduced from Rs 50,000 to Rs 500 and he should start SIPs of Rs 6,000 per month in an ELSS fund. Turn to page 16 to know the best performing ELSS funds.
Saxena has group health insurance cover from his employer. He should buy a cover for himself and his family. A health insurance premium of Rs 25,000 will reduce his tax by around Rs 5,200.
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