How old income tax regime can help save Rs 52,000 tax
economictimes.indiatimes.comNPS benefit offered by his company, and invests in the pension scheme on his own as well.
As a first step, Tomar should inform his company that he wants to opt for the old tax regime. Several deductions available to him will not be considered under the new regime.
He lives in a rented house, is repaying an education loan, has bought medical insurance for himself and his mother, and can invest more under Section 80C. These will not be eligible for deduction in the new tax regime.
If he claims the full Rs.1.5 lakh deduction under Section 80C, his tax will reduce by about Rs.30,000.
Next, he should opt for the NPS benefit from his employer. Under Section 80CCD(2), up to 10% of the basic salary put in the NPS on behalf of the employee is tax-free.
If his company puts Rs.4,000 (10% of basic) in the NPS every month, his tax will reduce by almost Rs.10,000. Another Rs.10,400 can be saved if he invests Rs.50,000 in the NPS on his own under Section 80CCD(1b).
At 26, Tomar should put the maximum 75% of the corpus in equity funds.
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