As our earnings increase, tax liability also increases, but if tax planning is done in a smart way, then tax liability can be reduced considerably but zero tax can also be done.
Income Tax Savings: If you also pay tax, then there is news of work for you. Your salary is more than Rs 10 lakh per annum, and you are going to pay a large part of your earnings to the government in the form of tax. If you think that you have no way to save tax, therefore it is right to pay tax, 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.
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.50,0000 as standard deduction
10,50,0000-50,000 = Rs.10,00,000
2- After this you can save 1.5 lakh rupees under 80C. In this, you can avail income tax exemption on investment in EPF, PPF, ELSS, NSC and up to Rs 1.5 lakh annually as tuition fees for two children
10,000,000 – 1,50,000 = 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.
8,50,000-50,0000 = 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.
8,00,000-2,00,000 = 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.
6,00,000-75,000 = 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.
5,25,000-25,000 = 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 5 lakh slab.
Total Tax Deduction = 5,00,000
Net Income = 5,00,000
