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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


 

Published by

CA ANKIT GUPTA
(EXPERT )
Category Income Tax   Report

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