Income Tax Savings: As our earnings increase, tax liability also increases, but if tax planning is done in a smart way, then tax liability can be reduced significantly but zero tax can also be done.
- Tax will not have to be paid even on salary of Rs 10 lakh
- Keeping track of expenses is very important
- See full calculation here.
New Delhi: Income Tax Savings: If your salary is more than 10 lakh rupees annually, and you are going to the government in the form of tax a large part of your earnings. If you think that you have no way to save tax, therefore paying tax is right then you are wrong. Even if your salary is Rs 10.5 lakh per annum, even then you will not have to pay even 1 rupee as tax. Let us tell you here easy calculus.
- Tax will not have to be paid even on salary of Rs 10 lakh
For this, you have to keep the savings and expenses in such a way so that you can take full advantage of the tax exemption available on it. We are going to explain this method to you in very simple words. After which you can zero your tax liability. let’s understand
Suppose your salary is Rs 10,50,000 per annum, and your age is less than 60 years, that means you will fall in 30% slab.
1- First you deduct Rs.500000 as standard    deduction
10,50,0000-50,000Â = Rs.10,00,000
2- After this you can save 1.5 lakh rupees under  80C. In this, you can take advantage of income   tax exemption on investment in EPF, PPF, ELSS,  NSC and up to Rs 1.5 lakh annually in the form  of tuition fees for two children.
10,000,000- 1,50,000Â = Rs.8,50,000
3- If you invest up to Rs 50,000 annually in the   National Pension System or NPS on your behalf,  then under section 80CCD (1B) of the Income  Tax Act, you get help in saving income tax  separately.
8,50,000-50,0000Â = Rs.8,00,000
4- If you have taken a home loan, then you can  claim tax exemption on the interest of 2 lakhs  under section 24B of income tax.
8,00,000-2,00,000Â = Rs.6,00,000
5- One can claim deduction up to Rs 25,000 for  health insurance premium including cost of  preventive healthcare check-up for spouse,  children and yourself under Section 80D of  Income Tax. Apart from this, if you buy health  insurance for the parents, then you can get an  additional deduction of up to Rs 50,000. The  condition is that the parents should be senior   citizens.
6,00,000-75,000Â = Rs.5,25,000
6-Under section 80G of Income Tax, you can  claim tax deduction on the amount given in the  form of donation or donation to organizations.  Suppose you made a donation of Rs 25,000, then  you can take tax exemption on it. However, you  will have to submit documents to confirm the  donation or donation. A stamped receipt should  be received from the institution to which you  donate or donate. This will be the proof of  donation that has to be submitted at the time of  tax deduction.
5,25,000-25,000Â = Rs 5,00,000
7- So now you have to pay tax only on income of  Rs 5 lakh and your tax liability will be Rs 12,500  (5% of 2.5 lakh). But, since the exemption is Rs  12,500, he will have to pay nil tax in the slab of  Rs 5 lakh.
Total Tax Deduction = 5,00,000
Net Income = 5,00,000
Tax Liability   = Rs.0
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