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Tax optimiser: Salaried Kumar can save Rs 50,000 tax via NPS, health insurance

Not only should you ask your employer for the NPS benefit, but you should also invest in the scheme on your own. You can reduce your tax outgo significantly.

May 13, 2019, 06.30 AM IST
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You can optimise your tax outgo by rejigging their income and investments.
By Sudhir Kaushik of

Bengaluru-based IT professional Mahesh Kumar’s salary structure is reasonably tax friendly but he doesn’t avail of all the tax breaks available to him. Taxspanner estimates that Kumar can save more than Rs 50,000 in tax if he opts for the NPS benefit offered by his company and invests in the scheme on his own. Also, some of the taxable allowances in his salary should be replaced with tax-free perks.

Income from employer


Income from other sources


Kumar should start by opting for the NPS benefit under Section 80CCD(2). Under this, up to 10% of the basic salary put by a company in NPS on behalf of the employee is tax deductible. If his company puts Rs 5,250 (10% of his basic salary) in the NPS every month, it will cut his annual tax by around Rs 20,000. Another Rs 15,600 can be saved if he invests Rs 50,000 in the NPS on his own.

Tax-saving investments


Other deductions


At 32, Kumar should opt for an aggressive allocation with the maximum 75% in equity funds. Some of the perks (conveyance, medical) in his salary package are now taxable. If these are replaced by other tax-free perks such as reimbursements of telephone bills (Rs 2,000 a month) and books and periodicals (Rs 1,250 a month) he can save another Rs 12,000 in tax.

Mahesh Kumar’s tax


Kumar relies on the group health cover from his company. Group health covers are useful but end when a person changes jobs. He should buy a separate health cover of at least Rs 5 lakh for his family. A premium of Rs 20,000 will reduce his tax by Rs 6,240.

Write to us for help
Paying too much tax? Write to us at etwealth@ with ‘Optimise my tax’ as the subject. Our experts will tell you how to reduce your tax by rejigging your pay and investments.

(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of

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