Jhaveri should start by asking that the transport and medical allowances in his salary, which are now taxable, should be replaced with a newspaper allowance. He should also ask for a higher telephone allowance. This rejig will cut his tax by about Rs 9,400.
Jhaveri already invests in the NPS and claims deduction under Sec 80CCD(1b). He can save more tax by opting for the NPS benefit offered by his company. Under Sec 80CCD(2d), up to 10% of the basic salary put in scheme is deductible. If Jhaveri’s company puts Rs 80,000 (Rs 6,666 per month) in the scheme on his behalf, his annual tax will be cut by about Rs 25,000. Jhaveri is only 31, so he should allocate the maximum 75% of the corpus to equity funds.
If Jhaveri takes a home loan, up to Rs 2 lakh interest paid on the loan can be claimed as a deduction. His HRA will be fully taxable, but the home loan deduction under Sec 24 will cut his tax by about Rs 12,500.
INCOME FROM EMPLOYER
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