TThe other allowances provided by the company were telephone bills, vehicle maintenance and food coupons. These would also qualify for tax breaks. Preethi planned to claim the following during the year:
The bills for the tax-free perquisites had to be provided to support the claims adequately. She was providing these on a monthly basis to the company as part of the normal reimbursement cycle.
Deductions u/s 80C and 80D
While Investment up to Rs 1 lakh will qualify as deduction u/s 80C, there are numerous options within this arena. Investments as a genre are divided broadly into equity-oriented and traditional (non-equity) instruments like fixed deposits.
We embarked on the task of assessing taxes at this stage and ascertaining the amount that one needed to invest to gain the benefit u/s 80C and 80D:
The taxable income will help ascertain which tax bracket one falls into. Preethi falls within the 20 per cent bracket but by utilising section 80C & 80D effectively, she can conveniently fall within the 10 per cent tax bracket.
Also see: Do's and don'ts of surviving the stock market
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