Help me with saving taxes

sanz1112

Disciple
I have a decent annual compensation and even with investing 1.5L in 80c, 50k in NPS, 50k in medical insurances (80D), and 70k in HRA, my annual tax computation for this year is coming around 6.5L.
That's freaking too much and a considerable amount that government is taking as income tax. I get it it's for nation building, however this is a huge amount of money that is going to waste for which I'm working my ass of everyday.
Is there any otherway I can save on taxes ? I haven't yet bought home and I guess home loan would save some of the tax however, considering global recession and having a job in a field where you can be laid of anytime I don't want to bind myself with monthly EMIs.
Any other way to save on taxes ?
 
Check with ur HR if they have these provisions.
1. LTC
2. petroleum bills/insurance for vehicle
3. Phone /internet bills

Also if ur into charity and donations, u can do that as cash donations and ask for bill for claiming tax rebate
 
This is the reality of today's Indian taxation. Tax slabs under the old regime have not been changed for a full 9 years now. So obviously the tax burden is going to increase disproportionately.

I'll also be paying close to that amount in the coming year, as a salaried employee. There's not much to do here.

A couple of points which you may check:
  • Do you have PF? If yes, you might want to contribute the full amount instead of the minimum. In this case, employer's contribution will increase significantly and go outside the tax net.
  • Does your employer have NPS? If yes, then you can ask the employer to contribute to your NPS as well. In this case, employer's contribution will result in extra deduction up to a maximum of 10% of your basic
If you have education loan (self or dependent), you get deduction for interest u/s 80E.

As an aside, I was shocked at the 70k rent thinking you'd be living in a tent :hilarious:. In Mumbai, my rent is 70k for 2 months (1 BHK)
 
  • Do you have PF? If yes, you might want to contribute the full amount instead of the minimum. In this case, employer's contribution will increase significantly and go outside the tax net.
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As an aside, I was shocked at the 70k rent thinking you'd be living in a tent :hilarious:. In Mumbai, my rent is 70k for 2 months (1 BHK)
OP's 80C limit is reached, and PF (EPF, VPF or PPF), all comes as part of 80C. Its sad part that a very long term lock-in retirement fund is also included in 80C.

And yeah, the 3 formulae to determine the final HRA also has to be revised. When you are on higher side of income, the HRA component just reduces to peanuts :pensive:
 
As an aside, I was shocked at the 70k rent thinking you'd be living in a tent :hilarious:. In Mumbai, my rent is 70k for 2 months (1 BHK)
Hahaha. That's HRA not the acutal rent I pay. The calculations for HRA is absurd, though my org give me around 6L of HRA annually, the calculation goes like this
Actual HRA received from org
40% of Basic
Actual rent paid - 10% of Basic
Out of these 3 the lowest is choosen. In my case my actual rent paid - 10% of Basic is 70k which is the lowest of these 3.
I live in Pune and I pay around 3L rent anually for a 2BHK apartment.
 
OP's 80C limit is reached, and PF (EPF, VPF or PPF), all comes as part of 80C
Please read a bit more carefully.
I live in Pune and I pay around 3L rent anually for a 2BHK apartment.
It seems your basic is very high. In our company, they've structured the pay to keep basic at a level where rent paid - 10% of basic doesn't eat up much into my HRA exemption. I pay 35k and manage to get ~28k in exemption for a total of about 3.2 Lakhs last year.
 
It seems your basic is very high. In our company, they've structured the pay to keep basic at a level where rent paid - 10% of basic doesn't eat up much into my HRA exemption. I pay 35k and manage to get ~28k in exemption for a total of about 3.2 Lakhs last year
Yes exactly. HRA is supposed to be saving me taxes. But here in my org the Basic component of my salary is very high and it's uniform for every employee. Half of my compensation is Basic. Other half is flex benefits like Meal coupons, Allowances etc. Don't know why they have kept the comp structure like this.
Do you have PF? If yes, you might want to contribute the full amount instead of the minimum. In this case, employer's contribution will increase significantly and go outside the tax net.
And about this, I'm already at the max. My pf is already covering whole of 80C. Annual PF deduction is itself 1.5L.
 
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Yes exactly. HRA is supposed to be saving me taxes. But here in my org the Basic component of my salary is very high and it's uniform for every employee. Half of my compensation is Basic. Other half is flex benefits like Meal coupons, Allowances etc. Don't know why they have kept the comp structure like this.

And about this, I'm already at the max. My pf is already covering whole of 80C. Annual PF deduction is itself 1.5L.
How about new tax regime. We know it sucks for most slabs but have you tried your inputs there?
 
And about this, I'm already at the max. My pf is already covering whole of 80C. Annual PF deduction is itself 1.5L.
I gave general observation with regards to 80C and tax exception in matter related to PF in OP's case , can you write here the matter of confusion ?
I thought my statement was clear, but apparently it wasn't. So here:
Do you have PF? If yes, you might want to contribute the full amount instead of the minimum. In this case, employer's contribution will increase significantly and go outside the tax net.
If you're already contributing at max level, then this is not applicable, but I was talking about the employer's contribution to PF, which is not a part of 80C. Maximum contribution to PF means maximum employer's contribution, which then doesn't even appear as a part of your taxable income. So no question of it going under 80C.
 
I thought my statement was clear, but apparently it wasn't. So here:
The statement "Please read a bit more carefully" is vague, it is neither asking for clarity nor giving clarity to the discussion :)

  • Do you have PF? If yes, you might want to contribute the full amount instead of the minimum. In this case, employer's contribution will increase significantly and go outside the tax net.

OP's 80C limit is reached, and PF (EPF, VPF or PPF), all comes as part of 80C. Its sad part that a very long term lock-in retirement fund is also included in 80C.
your statement asks OP to contribute full amount to PF, but his 80C limit is already full, so, no use putting more money there. hence, I said the same

Now, generally, PF component is taken as 12% of basic (it always stays at 12% of basic , or generally in max number of pvt companies )
ex. if 100rupees is basic, employer and employee contributes 12 each, a total of 24rupees to EPF.
Employee has option to increase his contribution which is called as VPF , but employer contribution do not increase for this case

If you're already contributing at max level, then this is not applicable, but I was talking about the employer's contribution to PF, which is not a part of 80C. Maximum contribution to PF means maximum employer's contribution, which then doesn't even appear as a part of your taxable income. So no question of it going under 80C.
From my example above, he cannot contribute 10rs, its always at 12rs. So, he maxed out his PF contri there.
and employer's contribution is again fixed at 12% basic, and also its not like employer contributes 10rs and employee contributes 8rs. They always contribute same amount to EPF.
The payroll team generally does not tweak %ages in payroll for individual employees, may be a remote possible in small startups

Happy to get corrected !!!
 
Now, generally, PF component is taken as 12% of basic
Many many private companies keep the default contribution at minimum allowed level, which is Rs. 1800 per month or Rs. 21,600 per year.

As I said above, if the employee is already contributing at max level, then this is not applicable. Only applicable where the contribution is 1800 per month.
 
How about new tax regime. We know it sucks for most slabs but have you tried your inputs there?
New scheme is not any better. Total tax liability is only few thousand less than the old scheme. Atleast if I decide to take home loan in this financial year the old scheme will surpass easily the new one in saving taxes. Not that I want to take home loan but atleast I have that option with old scheme.
 
New scheme is not any better. Total tax liability is only few thousand less than the old scheme. Atleast if I decide to take home loan in this financial year the old scheme will surpass easily the new one in saving taxes. Not that I want to take home loan but atleast I have that option with old scheme.
Don't take home loan just to save taxes, only take it if you can use it yourself or sure about its investment value years from now. I am guessing you are in highest tax slab of 30% then there isn't much you can do as a salaried individual. Just think of it this way that despite paying 6.5 lakh tax you are amongst the top 1% earners in India.
 
I have an option that might not work 100% but it is possible to do. Ask your company to hire you as a contractor/freelancer. You might lose all your employee benefits but if you manage to bargain everything into a rock-solid contract, you will still earn the amount you earn while saving a lot of the tax you are paying.
Again there are some major drawbacks, and it all depends and varies from company to company but it is doable if the company is flexible enough.
 
New scheme is not any better. Total tax liability is only few thousand less than the old scheme. Atleast if I decide to take home loan in this financial year the old scheme will surpass easily the new one in saving taxes. Not that I want to take home loan but atleast I have that option with old scheme.
I would suggest talking with a personal tax consultant.
 
Does our employer tax dept. esp MNCs personally verifies each and every employers investment declarations and only then processes sit further with the IT?
Asking as many such MNCs have 15k - 25k+ employees and wonder how they achieve the target to actually verify if the submitted investments are even legit.
 
Does our employer tax dept. esp MNCs personally verifies each and every employers investment declarations and only then processes sit further with the IT?
Asking as many such MNCs have 15k - 25k+ employees and wonder how they achieve the target to actually verify if the submitted investments are even legit.
It is not employer's job to verify, they just report whatever employees report to IT dept which then crosscheck that data with filed ITR.
 
It is not employer's job to verify, they just report whatever employees report to IT dept which then crosscheck that data with filed ITR.
Well I do get intimation for any document uploaded from my Cos. Tax dept. if the doc is valid or not etc. Hence I asked...
 
Well I do get intimation for any document uploaded from my Cos. Tax dept. if the doc is valid or not etc. Hence I asked...
Your co. is probably doing a simple format check(like pan number/policy number etc are in correct format like pan should be 10 character alphanumeric or policy number format & company name is valid etc).
 
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