How Much Should My Sister Invest in Insurance to Maximize Tax Savings? Need Quick Advice!

Hi,

I have provided my sister's last month's salary SIP Form 16 summary. Can anyone tell me how much my taxable income is?

Form 16 Summary:
------------------
Gross Salary - 2,97,438.66
Exemption U/S 10 - 58,547.84
Balance - 2,38,890.82
Employment Tax (pro Tax) - 1,095.00
Aggregate Deduction - 1,095.00
Income under Head Salary - 2,37,795.82
Gross Total Income - 2,37,795.82
Aggregate of Chapter VI - 1,00,000.00
Total Income - 1,37,800.00.

In this, I plan to give HRA Rs.7,500.00 as her actual HRA is 8,500/month, and she is also paying Rs. 8,000 per month as rent in the metro. After that, how much amount does she need to invest in any of the insurance premiums? Please tell me quickly because she has to report it within a couple of days. (Basic Pay is Rs.10,050, PF deduction is Rs.1206 per month.)

Thank you.

Taxable Income Clarification

She is not falling under taxable income. Her taxable income is $137,800, whereas she has a ceiling of up to $190,000.

Regards,
R. Ponraj

No need to invest. Her salary is under the limit and not taxable. If she wants to invest any more, she can choose a VPF/PPF account for savings.

Hi Pradeep,

I think this is a projected calculation till March 2011, and the deduction under section 10 and Chapter VI A may also include the declared amount. Please confirm if the aggregate of Chapter VI - 1,00,000.00 is the declared amount of investment. If so, what is the actual investment she has? If she does not have any investment, then PF (1206*12 = 14472) will be the actual amount under Chapter VIA, which will result in an increase in the gross taxable income, i.e., it will be 237796-14472 = 223324 (10% tax) plus education cess (3%) equals 100. Therefore, the total tax will be 3432/-. The actual calculation can be provided once you clarify the actual investment.

Regards,
Siji