Salaried person can save tax by Rs.83000 by just simple tax planning for FY 2018-19
Bangalore-based IT professional T. Chandramouli pays a very high tax
because his pay structure is not very tax friendly. With no tax-free
allowances, a good 15% of his income goes up in tax.
Taxspanner estimates that Chandramouli can reduce his tax by over Rs 83,000 if he gets a few tax- free perks and the NPS benefit from his company and he invests more in the scheme on his own.
Income from employer
Chandramouli should start by asking his company to replace the
taxable transport allowance in his pay with tax-free perks. These can be
telephone and newspaper bills reimbursements, food coupons and the LTA.
If he gets Rs 15,000 for telephone, books and periodicals and food
coupons worth Rs 24,000, his tax will reduce by about Rs 12,000. Another
Rs 15,600 will be saved if he gets LTA of Rs 50,000.
Next,
he should ask his company for the NPS benefit. Under Sec 80CCD(2), up
to 10% of the basic salary put in NPS is deductible. If his company puts
Rs 8,766 (10% of his basic pay) in the NPS on his behalf every month,
his tax will reduce by about Rs 33,000.
Another Rs 15,600 can be saved if he invests Rs 50,000 in the NPS on
his own under Sec 80CCD(1b). At 43, Chandramouli should opt for a
balanced allocation which invests equally in equity, gilt and corporate
debt funds.
Chandramouli has bought a medical cover for his parents but relies on
group health cover for his own family. He should buy a separate health
cover for his family. A premium of Rs 20,000 will cut his tax by Rs
6,240.
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