TaxSavvy

TaxSavvy for salaried, ₹25 L to ₹50 L

You are in the 30% slab. Every rupee of planning now counts.

₹25 L to ₹50 L a year

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  • AIS or 26AS
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Questions, answered the CA way

Facts, Provisions and law, Analysis, Conclusion.

  • Section 124 (old 80CCD(2)): Employer NPS Contribution (Both Regimes)
    Facts
    The only deduction available in BOTH old and new tax regime. Employer contributes to your NPS on your behalf. You pay zero, and get a ₹45,000 to ₹1.05L annual deduction. The most underused tax saving move for salaried professionals.
    Provisions and law
    Sec 124 (old 80CCD(2)); Finance Act 2024; Sec 202 (old 115BAC); Sec 80CCD(1B); PFRDA Regulations
    Analysis
    How Sec 124, Income-tax Act 2025 (old Sec 80CCD(2)) works in practice: Your basic salary is ₹50,000/month. Employer contributes 14% of ₹50K = ₹7,000/month to your NPS. That ₹7,000 is NOT counted as your income. Annual NPS contribution by employer = ₹84,000. Deduction under Sec 124 (old Sec 80CCD(2)) = ₹84,000. Your in-hand salary is unchanged. But your taxable income falls by ₹84,000. Two-step benefit: Step 1, Lower taxable income now (immediate tax saving). Step 2, NPS corpus grows tax-free. At retirement: 60% lump sum withdrawal tax-free. 40% in annuity (taxable as salary in retirement, but typically at lower rate). New regime taxpayers especially benefit: In new regime, Sec 123, 126 (old Sec 80C, 80D), home loan interest are all gone. But Sec 124 (old Sec 80CCD(2)) REMAINS. For a new regime taxpayer at 30% bracket with basic salary ₹50K/month: ₹84,000 × 30% = ₹25,200 saved annually. Zero investment required from them.
    Conclusion
    • Check if NPS account (PRAN) exists, if not, open via eNPS portal (enps.nsdl.com)
    • Inform employer HR to activate NPS employer contribution (Form KYC to employer)
    • Request CTC restructuring, move portion of special allowance to NPS employer contribution
    • Confirm the contribution percentage: private sector max 14% of (basic + DA)
    Read the full answer
  • FD Interest: Slab Rate, Sec 393 (old 194A) TDS, Form 121 (old Form 15G / 15H)
    Facts
    FD interest is the most commonly underdeclared income in India. Banks report every rupee to AIS via SFT. CPC computers compare AIS with ITR automatically. A missed ₹50,000 FD interest triggers a ₹25,000+ demand notice. Know the TDS rules and the Form 121 (old Form 15G/15H) exemption.
    Provisions and law
    Sec 393 (old 194A); Sec 393(6) (old 197A); Sec 93 (old 57); Rule 114-I; Sec 5
    Analysis
    How FD interest appears in AIS: Your bank files SFT to TRACES quarterly. Interest credited or accrued above ₹10K per account appears in AIS Category 5 (Interest from Deposits). If you have FDs in 3 banks: all 3 show up in AIS. Total AIS interest figure must match what you declare in ITR Schedule OS (Other Sources). Mismatch = Sec 270(1), Income-tax Act 2025 (old Sec 143(1)) notice. TDS threshold per bank: The ₹40K threshold (₹50K senior) is per bank, not per FD. All FDs in one bank are aggregated. Example: SBI FD interest ₹35K + SBI RD interest ₹10K = ₹45K → TDS applies (above ₹40K). But SBI ₹35K + HDFC ₹35K = SBI below threshold (no TDS from SBI) + HDFC below threshold (no TDS from HDFC) → but your total income includes both ₹35K amounts. You must pay tax on ₹70K total even though no TDS was deducted. Form 121 (old Form 15G) eligibility: Non-senior. TWO conditions both must be met: (1) FD income from THAT bank must be below ₹40K.
    Conclusion
    • List all FDs across all banks, amount, rate, maturity date, interest credited this FY
    • Download Form 131 (old Form 16A) from each bank (TDS certificate for FD interest) or check Form 168 (old Form 26AS)
    • Download AIS, Category 5 (Interest from deposits), add up all banks
    • Compute total FD interest for the year. This is income from other sources.
    Read the full answer
  • Tax Harvesting: ₹1.25L Annual LTCG Reset
    Facts
    The most underused legal tax saving in India. Every April 1, the ₹1.25L LTCG exemption resets. Sell equity MF or shares with up to ₹1.25L unrealised gain, book the profit tax-free, buy back immediately. Cost basis resets to current price. Do this every year: save ₹15,625/year in tax, permanently reduce future tax liability.
    Provisions and law
    Sec 198 (old 112A); No wash sale rule; STT on equity; Budget 2024
    Analysis
    Exactly how harvesting works: You hold HDFC Flexi Cap MF SIP since Jan 2022. By Feb 2026 (48 months = 4 years), unrealised LTCG = ₹2.8L. Step 1: Redeem units worth ₹1.25L of LTCG (you don't need to redeem all units, only enough to book ₹1.25L gain). Step 2: Immediately buy back the same amount in the same fund. Step 3: Your new cost basis is today's NAV. Gain booked: ₹1.25L, tax: zero (within exemption). Next year: fresh ₹1.25L exemption available. How much to redeem: Not the full portfolio. Just enough units to realise ₹1.25L of gains. If your average gain is 50% (bought at ₹100, now ₹150): redeem ₹3.75L worth of units → ₹1.25L is gain. Buy back ₹3.75L immediately at ₹150 NAV. Net cash outflow: zero (sell and buy same amount). Transaction costs: exit load (if within 1 year, avoid) + STT on sell (₹0.001% on ₹3.75L = ₹3.75, negligible).
    Conclusion
    • Check holding period for all equity MF and shares in January: which positions are 12+ months old?
    • Pull unrealised gains statement from broker or CAMS (filter: LTCG only, 12+ months)
    • Calculate: how many units to redeem to book exactly ₹1.25L of LTCG (not more)
    • Verify no exit load on the units being redeemed (held 12+ months → exit load usually nil)
    Read the full answer
  • Angel Tax: Section 56(2)(viib) and Exemptions
    Facts
    The most feared provision in startup funding. When a startup raises money from an angel investor at a valuation higher than the "Fair Market Value" computed by the tax department, the premium is taxed as income in the startup's hands, even though it is investment capital. A ₹1Cr raise can generate a ₹30-40L tax demand. DPIIT recognition is the primary shield.
    Provisions and law
    Sec 56(2)(viib); Rule 11UA; DPIIT Exemption; Category I AIF; Finance Act 2024
    Analysis
    How angel tax hits in practice: Startup valued at ₹5Cr by angel investor. Angel invests ₹50L for 1% equity. Revenue at time of investment: ₹20L. DCF FMV computed by CBDT: ₹1.5Cr (based on your current numbers). Angel tax: (₹50L investment − FMV proportion) = notional premium of ₹35L. Tax at 30%: ₹10.5L. The startup just paid ₹10.5L tax on money raised, before spending a single rupee on growth. DPIIT recognition is the cleanest solution: Apply BEFORE raising money. Takes 2 days. Free. On recognition: Sec 56(2)(viib) does not apply if investor is a resident individual and the startup satisfies the recognition criteria. No angel tax, no FMV calculation needed. Period. If already received investment and don't have recognition: Get a chartered accountant to compute FMV using DCF method NOW, document it. If FMV ≥ investment amount: no angel tax exposure.
    Conclusion
    • If raising or planning to raise: apply for DPIIT recognition BEFORE issuing shares
    • Confirm investor category: SEBI-registered AIF (no angel tax), resident individual (need DPIIT), NRI (need DPIIT now as of 2024)
    • If not DPIIT-recognised: get CA to compute FMV using DCF method before share allotment
    • FMV computation: DCF or NAV, choose whichever is HIGHER to minimise taxable "premium"
    Read the full answer

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