Sinha should start by asking her company for a few tax-free perks, such as reimbursements for telephone and newspaper bills and food coupons.
Mumbai-based software professional Shweta Sinha pays a low tax because her salary structure is quite tax friendly. But it is possible to reduce it further. Taxspanner estimates that Sinha can reduce her tax by almost Rs 30,000 if she gets a few tax-free perks and the NPS benefit from her company. She should also rejig her tax planning by reducing the allocation to the PPF and investing in the NPS on her own.
Sinha should start by asking her company for a few tax-free perks, such as reimbursements for telephone and newspaper bills and food coupons. These perks are tax-free against submission of invoices and actual usage. If she gets Rs 500 a month for telephone and Internet, Rs 1,000 for books and periodicals and Rs 1,833 worth of food coupons every month, her tax will reduce by Rs 8,300.
Income from employer
Income from other sources
Next, she should ask for the NPS benefit. Under Sec 80CCD(2), 10% of the basic salary put in the NPS is tax-free. If her company puts Rs 3,812 (10% of her basic pay) in the NPS, her tax will reduce by Rs 9,500. Another Rs 10,400 can be saved if she invests Rs 50,000 in the NPS under Sec 80CCD(1b) on her own. At 32, Sinha should opt for an aggressive allocation which puts 75% of the corpus in equity funds.
Shweta Sinha’s tax