Pune-based IT professional Dipti Kulkarni pays low tax because her salary structure is fairly tax-friendly. However, there is scope to bring this down further. TaxSpanner estimates that Kulkarni can reduce her tax outgo by almost Rs.34,000 if her salary structure is rejigged to include some tax-free perks, if she avails of the tax-friendly perks being offered by her company, and invests in the NPS on her own.
Kulkarni should start by asking her company for more tax-free allowances in her package, such as leave travel allowance (LTA). An LTA of Rs.60,000 will cut her tax by almost Rs.12,500. If she opts for the meal coupons offered by her company, her tax will be reduced by around Rs.5,500. Another Rs.10,400 can be saved if she invests Rs.50,000 in the NPS under Section 80CCD(1b). At 33, Kulkarni should allocate the maximum 75% to equity funds.
Though Kulkarni has opted for the NPS benefit from her company, she is not planning to invest more in the scheme. “I haven’t decided whether to opt for the new tax regime or stay with the old one,” she says. Kulkarni wants to avoid the annual hassle of submitting rent receipts and proof of tax-saving investments for claiming exemptions and deductions under the old regime. “I missed the submission deadline this year and a very high tax was deducted from my pay in February,” she says.
While she has a point, Kulkarni can save almost Rs.25,000 in tax if she stays with the old regime and claims all the available deductions and exemptions. These include Rs.1.5 lakh worth of investments under Section 80C, Rs.50,000 contribution to the NPS and medical insurance premium of Rs.25,000 for a health cover for her family.
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