Pune-based media professional Navya Kohli pays a low tax because though her salary structure is not tax efficient, she claims several deductions. One of Kohli’s parent has a severe disability which makes her eligible for a tax deduction of Rs 1.25 lakh. Taxspanner estimates that Kohli can bring down her tax by nearly Rs 62,000 if her salary is rejigged to include some tax-free perks and her company offers the NPS benefit and she also invests in the scheme on her own.
Income from employer
Income from other sources
Kohli should start by asking for the NPS benefit. Under Sec 80CCD (2), up to 10% of the basic put in NPS is tax free. If her company puts Rs 5,477 (10% of her basic) in the NPS every month, her annual tax will reduce by almost Rs 13,700. Another Rs 10,400 can be saved if she invests Rs 50,000 in the NPS on her own. At 31, Kohli should allocate the maximum 75% to equity funds of the NPS.
Tax Saving Investments
Next, she should ask for tax-free perks such as reimbursements of expenses on conveyance, telephone, newspaper and gadgets. Since she is not able to claim LTA, this can be removed. If she gets conveyance reimbursements of Rs 5,000, a telephone allowance of Rs 1,000, newspaper allowance of Rs 500 and gadget allowance of Rs 5,000 per month, her annual tax will reduce by almost Rs 31,000. Kohli and her parents are covered by the group health insurace cover from her employer. They also have a small family floater cover. This should be enhanced to Rs 5-6 lakh. A higher health insurance premium of Rs 25,000 will reduce her tax by almost Rs 2,700.
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Paying too much tax? Write to us at etwealth@ timesgroup.com with ‘Optimise my tax’ as the subject. Our experts will tell you how to reduce your tax by rejigging your pay and investments
