ET advises readers on how to restructure their income, investments and expenses to optimise their tax.
ET advises readers on how to restructure their income, investments and expenses to optimise their tax.
Anshu Singh works for a US-based organisation and lives in Ahmedabad.
Almost 14 per cent of her income goes in tax, largely because her salary is very tax unfriendly.Taxspanner estimates that Singh can reduce her tax by almost Rs 64,000 by a few change in the salary structure and additional investments.
Though Singh’s company does not allow changes in the pay structure, she should ask her employer to reduce her special allowance and instead give her certain perks. The transport allowance, for instance, will reduce her tax easily. Other perks require submission of actual bills. If she gets conveyance and telephone bills worth Rs 54,000 reimbursed, her tax will reduce by Rs 22,000. Next, she should ask for 10 per cent of her basic pay to be put in the NPS under Sec 80CCD(2d). If Rs 68,000 is put in the NPS, her tax will come down by almost Rs 21,000. Another Rs 15,450 can be saved if she invests Rs 50,000 in the NPS under Sec 80CCD(1b).
But this money will get locked till she turns 60. Singh has health cover from her employer but she should also buy one herself. If she pays a premium of Rs 15,000, her tax reduces by about Rs 4,700.
