How Can I Lower My Income Tax with My Current Salary and Investments? Seeking Advice!

Hello,

My name is Pratik Ranka. I am working in a software company as a Team Lead. I want to know how I can reduce my income tax. My current package is 660,000/-. Some details that may help you while providing suggestions:

1. I have a home loan of 950,000, with an EMI of 10,799/-. I have paid 13 installments up to now (Feb 2009). This house is in Indore, MP.

2. I am living in a rented house in Pune, MH, with a rent of 15,000 per month. I don't have any children.

3. I have some other investments of approximately 31,000, which are listed below:
- 4,627 - LIC
- 10,000 - SBI tax gain
- 10,000 - LIC money plus
- 6,415 - Mediclaim

Please also suggest a salary slip structure so that I can inform my HR to reset the salary structure.

Thanks,
Pratik

Dear Pratik Ranka,

Before answering your query, you have to furnish some more details.

1) You have mentioned that your EMI against a loan for Rs. 9,50,000/- is Rs. 10,799/-. Please provide details about the interest portion and principal portion of your EMI of Rs. 10,799/-. (Check your loan agreement or contact your bank).

2) Normally, EMIs are paid every month (i.e., 12 installments in a year). In your case, you have paid 13 installments. Please clarify this. Your pay structure and tax can be computed only after receiving this information.

Regards,
Jishnu V. Nair
Tax and EPF Consultant
Kerala
Email: infomanimangalam@gmail.com

Mr. Patrick,

Your tax liability depends on your investments and expenditure incurred in the financial year (FY). You can get tax exemption on interest paid on housing loan up to a maximum of Rs. 1,50,000/- (to be paid in this FY). Additionally, the principal amount paid in the FY will be exempted.

Based on your salary structure, you can claim reimbursements. For example, if you receive any special reimbursements such as communication, entertainment, or petrol reimbursements, you will receive tax consideration for these. Your salary structure will help compute your tax accurately.

Regards,

Vijay
Email: Vijay_babu64@yahoo.com

Hello,

I am posting all my details once again with MORE DETAILS. Please let me know:

Pay Structure:
- Salary: 660000 p.a.
- Basic: 387360
- TA: 9600
- DA: 96840
- HRA: 161400

Actual rent paid: 15000*12 = 180000 (I am in PUNE m.h.)

I have a home loan with an EMI of 10799 p.m (total 129588 p.a.)
Home loan interest paid this year: 94223. My mom and I submitted papers while taking the home loan, but repayment is made only from my salary. My home is in INDORE m.p., and my parents are living in that house while I am currently in Pune.

Total Investment made: 21042 (14627 LIC + 6415 mediclaim)

Can you please tell me how much income tax I need to pay and if the HRA is eligible for tax rebate?

Thank you,
Pratik Ranka

Dear Pratik Ranka,

Sorry for the late reply. (The last date for income tax payment was 31/03/2009). Your tax computation statement is attached herewith. If you have any doubts in this regard, please write in this forum.

Thanks,