Chennai based banker Rajeev Kumar, 34 years of age has a tax friendly salary structure but he can reduce his tax burden further. If his pay structure is organized and he puts more money into NPS then his tax disbursement can come down by almost Rs 30,000.
Kumar must start by asking for tax-free perks such as reimbursements of phone and newspaper expenses. If he gets Rs 36,000 a year under these heads then his tax will come down by Rs 7,200. Also he must ask his company to put 10% of his basic pay in the NPS under the Sec 80CCD(2d). If Rs 35,000 is put in the NPS account then his tax will reduce by another Rs 7,000. The NPS can reduce his tax further, if he puts Rs 50,000 in the scheme under the Sec 80CCD(1b). This scheme will cut his tax by Rs 10,300. But investing in the NPS will reduce his monthly pay to take home by Rs 5,700.
So, he should prefer for an intrusive option of the lifecycle fund of the NPS. The fund appropriates 75% of the corpus of equities till the age of 35 and then constantly brings this down.
Kumar must also purchase health insurance for himself and for his family. A policy that costs Rs 15,000 a year will reduce the tax by about Rs 3,090.
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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