At 6.8% of the income annual income, for a person tax outgo is not very high. He can even reduce it to at least 5%. A person can reduce his tax to almost Rs. 30,000 if he invests his money more in NPS and buying medical insurances.
Like many other companies, the employer allows organizing the paying structure. He should ask his employer to reduce his allowances and put 10% of his basic pay in his NPS under Sec 80CCD(2d). For example, If 10% of his basic pay (Rs.65,000) is put in the NPS then the tax will reduce by almost Rs. 13,500. He can save more money if he invests Rs. 50,000 in NPS under Sec 80CCD(2d). IF he wants to save tax then he has to sacrifice liquidity. The NPS gets locked due to his retirement.
If he has a health cover policy from the employer, the premium is paid by him (Rs. 12,000) which can cover him and his wife. Therefore, he can reduce his tax to almost Rs. 2,400/-.
He also requires to organize his insurance portfolios. He should refuse low- yield endowment plans and choose for ELSS funds that have the potential to agitate out higher returns.
Tax Assist is a professional income tax consultancy in India for both corporate houses and individual tax payers; the latter comprising Salaried Individuals, Seafarers, Professionals and Non Resident Indians.
With the help of Tax Assist and its team of income tax professionals, taxpayers can minimize their Income Tax liability, maximize their net income and create opportunities to save for current and future needs while maintaining proper accounting standards and income tax returns which are compliant with the Law.
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