Income Tax News: If their firm gives the NPS benefit and modifies the pay structure to incorporate tax-free benefits, employees can save around Rs. 1.2 lakh in taxes. They ought to begin by requesting that their employer offer the NPS benefit.
Unlocking NPS Tax Benefits
Up to 10% of the base salary contributed to the NPS on the employee’s behalf is tax-free under Section 80CCD(2). Their annual tax will be reduced by Rs. 39,000 if their company deposits Rs. 10,417 (10% of basic) in the NPS on their behalf each month. They are familiar with the NPS’s operation, having previously invested in it.
They should next request a few basic tax-free benefits, like meal coupons, petrol reimbursement, and reimbursement for phone and newspaper fees. A monthly fuel reimbursement of Rs. 5,000 will save them around Rs. 19,000 in annual tax. Their monthly tax will be lowered by almost Rs. 17,500 thanks to food coupons of Rs. 2,200, telephone reimbursements of Rs. 1,500, and a newspaper allowance of Rs. 1,000.
Gadget Allowance Advantage
An LTA of Rs. 65,000 will reduce the tax obligation by Rs. 20,000. If they receive a gadget allowance, they will save more taxes. Devices purchased for personal use are subject to only 10% value-based taxation under Section 17(2). Their tax will be reduced by Rs. 19,000 if they purchase devices for Rs. 60,000 in a year.
If They placed their Rs. 2.5 lakh emergency cash in a fixed deposit. All of the interest is taxed. They can steer clear of this by choosing a mutual fund instead. Even though fund gains are taxed at the same rate as interest on savings accounts, you are only required to pay taxes on withdrawals.
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