Mumbai-based finance professional Hitesh Penalty pays a high do Because his salary structure is not very tax friendly and he does not take advantage of all the deductions available to him. Taxspanner estimates that Penal could reduce his tax by more than Rs 58,000 if his salary structure is tweaked to include tax-exempt components, he opts for. NPS profit offered by his company and that Investment In the plan even on its own.

Penalties should start by choosing the NPS benefit offered by his company. Under section 80CCD(2), up to 10% of basic pay in NPS is tax free. If his company puts Rs 5,400 (10% of basic salary) in NPS every month, his annual tax will be reduced by about Rs 20,000. Another Rs 15,600 can be saved if he himself invests Rs 50,000 in NPS. At the age of 36, Dand should opt for aggressive allocation in NPS and invest maximum in equity funds.

Next, they should ask their company for some basic tax-exempt components such as vehicle, telephone and newspaper allowance. If they get Rs 5,000 as monthly vehicle reimbursement, Rs 1,500 for telephone and internet bills, and Rs 500 per month for newspapers and magazines, their annual tax will be reduced by about Rs 17,000. Dund and his family and parents belong to the group health insurance policy from your employer. He has also opted for top up by paying Rs 24,000. But the group cover continues only till one is employed in the company. That’s why Dand should buy health insurance on his own. The additional premium of Rs 21,000 would reduce his tax by about Rs 6,600.

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