CA ANKIT GUPTA
The objective of this blog is to empower the employees with knowledge by providing Minimum Income Tax knowledge that would enable him to save Maximum Income Tax by restructuring their respective Salary or Cost to Company components to avail the maximum benefits of Income Tax Laws.
The Idea to write this blog came when I saw form 16 of one of my client who has unnecessarily paid higher Income Tax which could have been saved if he intelligently allocate the amount of CTC/Salary.
The readers can understand it in a better way with the help of following graphical presentation.
|
INCOME HEAD |
CURRENT SCENARIO |
SUGGESTED SCENARIO |
AUTHORS VIEW |
|
Basic salary |
4,44,000 |
4,44,000 |
|
|
Conveyance Allowance |
18,000 |
19,200 |
Maximum amount of exemption allowed is Rs.1,600 per month. |
|
Leave Travel Concession |
40,000 |
40,000 |
|
|
House Rent Allowance |
2,15,600 |
2,15,600 |
|
|
Books |
5,000 |
5,000 |
|
|
Phone Bill Reimbursement |
18,000 |
18,000 |
|
|
Other Special Allowances |
90,000 |
61,400 [Diverted to Conveyance Allowance,Children Education,Gifts & Medical Insurance Premium] |
Fully Taxable therefore it is preferable to divert it to exempted allowances |
|
Children Education |
0 |
2,400 |
Maximum amount of exemption allowed is Rs100 per month per child for maximum 2 children |
|
Gifts, Vouchers & Tokens |
0 |
5,000 |
Exempted upto Rs.5,000 |
|
Medical Insurance Premium Paid by Employer |
0 |
20,000 |
Fully exempt (if Paid by Employer) |
|
TOTAL |
Rs.8,30,600 |
Rs.8,30,600 |
INVESTMENTS CLAIMED
|
INVESTMENT HEAD |
CURRENT SCENARIO |
SUGGESTED SCENARIO |
AUTHORS’s VIEW |
|
Fixed Deposits |
54,000 |
It is advisable to deposit money in PPF Account |
|
|
Life Insurance Premium and other Investments claimed |
62,000 |
62,000 |
|
|
Deposit in PPF Account |
0 |
88,000 |
The maximum amount of deduction available is Rs 1.5 Lac |
|
Housing Loan Interest Payment |
44,000 |
44,000 |
Allowed u/s 80EE |
|
Preventive Health Checkup Expenses |
0 |
5,000 |
Allowed as deduction even if it is paid in cash for himself or parent or spouse |
|
Medical Insurance Premium Paid for Parent |
0 |
15,000 |
Allowed u/s 80D upto Rs.20,000 |
|
TOTAL INVESTMENT |
1,60,000 |
2,14,000 |
TAXES PAID CALCULATION
|
TOTAL INCOME TAX PAYABLE |
60,894 |
49,770 |
|
|
INTEREST EARN ON PPF@8.7% |
0 |
7,565 |
|
|
INCOME TAX BORNE BY ASSESSEE |
42,205 |
By this way, that assessee could make savings upto Rs 18,689 in Income Tax for Assessment Year 2015-2016
Follow us to save your Income Tax for Assessment Year 2016-2017
Author can be reached at:
ANKIT GUPTA [TAX ADVISOR]
ankit@taxzippy.com
www.taxzippy.com
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