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If you want to keep your basic intact but do not mind a slightly lesser take-home pay, reduce your allowance and increase your retiral benefits to reduce your tax liability. The employer's contribution to PF is linked to your basic (12%) and unalterable. However, you can increase yours using the voluntary provident fund (VPF) route. VPF is even better than PPF because while both earn similar returns, PPF has a lock-in period of 15 years.Your EPF contributions can be withdrawn without any tax implication after five years of service. If tax liability is not nil after exhausting the Section 80C investment limit of `1.5 lakh, contribute towards NPS to claim an additional `50,000 deduction under the new Section 80CCD (1b). An employee's contribution is also considered as a self-contribution and therefore eligible for deduction under Section 80CCD (1b). One can first maximise his claims under Section 80C and then claim any residual under the new section. NPS, however, does not enjoy as high a liquidity as PF. Withdrawal is only allowed at retirement or under special circumstances.

Not all long-term benefits are tax-efficient, and you may want to get rid of a few as well. For instance, gratuity, another common long-term benefit is tax-free up to 15 days of basic pay or `10 lakh, whichever is lesser. However, it is payable only after five years of service. So, it is redundant if you do not plan to stick around for so long. Although not a very big com ponent, you should try and adjust the money under some other head.

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1. BNP Paribas Long Term Equity Fund

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5. IDFC Tax Advantage (ELSS) Fund

6. Birla Sun Life Tax Relief 96

7. DSP BlackRock Tax Saver Fund

8. Reliance Tax Saver (ELSS) Fund

9. Religare Tax Plan

10. Birla Sun Life Tax Plan

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