Tuesday, May 17, 2022
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How can you save Rs 70,000 in tax from NPS and Perks?

Nilesh is a marketing manager in a company in Vadodara. His salary is very good. But, he pays a lot of tax. The reason for this is that he does not take advantage of all the available deductions himself. Due to the compliance of the new wage code from April, the salary in their hands will also be reduced. Taxpayer estimates that if Nilesh’s company offers them NPS benefits and invests in the scheme themselves, their tax liability could be reduced by Rs 70,000.

Basic salary is to be up to 50 percent of the total income under the new wage code. Other benefits will also be linked to this. In Vadodara, Nilesh will not be able to claim the entire examination for HRA due to the rent not being very high. Examinations will decrease with more basic salary. In such a situation, Nilesh should ask for a lower HRA in the pay structure.

Income from company

Instead, it can be said to increase the other tax efficient component in salary. For example, up to 10 per cent of his basic salary can go to NPS. This will reduce their tax liability by about Rs 45,000.

If he himself invests Rs 50,000 in the pension scheme under section 80 CCD (1B), then another 15,000 rupees can be saved. Nilesh is now 38 years old. They should choose aggressive allocation in NPS. They should invest maximum in equity funds.

If Nilesh gets food coupons worth Rs 22,000, his tax liability will be reduced by Rs 6,800. They are tax free up to certain limits. For this actual bills have to be deposited.

In the new wage code, when their basic salary increases, the mandatory contribution in PPF will cover the deduction under section 80C. Hence, Nilesh should stop investing in ELSS funds.




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