G Manoharan has a high salary, but his salary structure is not very tax friendly. More than 17% of his income goes in tax, which is quite high. Though the options are limited, Taxspanner estimates that Manoharan can reduce his tax by nearly Rs 80,000 if his company offers him some tax-free perks, he invests in the NPS for retirement and avoids tax-inefficient investments.
Manoharan should start by asking his company to reduce his special allowance and instead give him tax free perks such as reimbursement of expenses on fuel, conveyance, telephone and newspapers. If he gets even Rs 13,500 under these heads per month, his annual tax will reduce by Rs 50,000. Next, he should ask his company to put 10% of his basic pay in the NPS under Sec 80CCD(2d). This will reduce his tax by Rs 25,000.
via Tax Optimizer: Salaried Manoharan can cut tax by 20% using NPS, perks