Vijay Sharma, a professional software based on Noida, pays a high tax because it does not claim all the tax deductions it has. Taxspanner estimates that Sharma can reduce his tax by over Rs 82,000 if he opts for a home loan, invests in the NPS and his company reorganizes its salary structure by replacing some of the taxable allowances with non-taxable benefits.
Employer’s income
Income from other sources

Sharma lives in her parents’ house and is not asking for an HRA exemption. He plans to buy a house this year. If he takes out a mortgage, he can substantially reduce his tax. A deduction of Rs 2 lakh will reduce his tax by around Rs 50,000. He should opt for the NPS benefit offered by his company. Under Section 80CCD (2), up to 10% of the NPS base stake is tax exempt. If his company pays Rs 3,550 (10% of his base salary) into the NPS each month, his annual tax will be reduced by around Rs 9,000. Another Rs 10,400 can be saved if he invests Rs 50,000 alone. in the program under Sec 80CCD (1b). At 31, Sharma should invest the maximum in equity funds.
Tax-saving investments


Sharma is also expected to ask her company to replace taxable transportation and medical allowances with non-taxable perks like phone allowance, home furnishings, gadget allowance, and newspaper allowance. If he receives a phone allowance of Rs 18,000 (Rs 1,500 per month), a newspaper allowance of Rs 12,000 (Rs 1,000 per month) and a gadget allowance of Rs 25,000 (Rs 2,083 per month ) per year, his annual tax will be reduced by approximately Rs. 11,500.
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