Budget 2025: In this time’s budget, the government has increased the limit of tax exemption including rebate to Rs 12 lakh. That is, if your salary is up to Rs 12 lakh, then under the new tax regime, you will not have to pay any tax.
Budget 2025: In this time’s budget, the government has increased the limit of tax exemption including rebate to Rs 12 lakh. That is, if your salary is up to Rs 12 lakh, then under the new tax regime, you will not have to pay any tax. However, if you add standard deduction and deduction made by the employer in NPS, then you can get tax exemption up to Rs 13.70 lakh in total. Let us know its calculation.
First know what is the tax slab
There will be no tax on income ranging from Rs 1 lakh to Rs 4 lakh. On the other hand, you will have to pay 5 percent tax on income from Rs 4 lakh to Rs 8 lakh. On the other hand, you will have to pay 10 percent tax on income from Rs 8-12 lakh. 15 percent tax will be levied on income from Rs 12-16 lakh. 20 percent tax will be levied on income from Rs 16-20 lakh. 25 percent tax will be levied on income from Rs 20-24 lakh. Apart from this, 30 percent tax will be levied on income above Rs 24 lakh.
How will there be no tax on up to Rs 13.70 lakh?
Although many deductions have been removed in the new tax system, but tax exemption is available on standard deduction and contribution to NPS through employer. Let’s understand the calculation.
Standard deduction
Salaried people get a standard deduction of Rs 75 thousand. That is, no matter what your salary is, you will not have to pay any tax on Rs 75 thousand. In this way, you will not have to pay any tax on salary up to Rs 12.75 lakh, not 12 lakh.
Corporate National Pension System
You can get tax exemption under 80CCD(2) by taking contribution to NPS through the employer. Employees of private and government companies can invest up to 14 percent of their basic salary in NPS in the new tax system.
How will ₹13.70 lakh be tax free?
Let us assume that you have a package of Rs 13.70 lakh. In such a situation, your basic salary will be at least 50 percent of your CTC (about ₹6.85 lakh). In such a situation, you can invest 14 percent of it i.e. up to Rs 95,900 in the Corporate NPS account. A standard deduction of Rs 75 thousand will be available on Rs 13.70 lakh and tax exemption will be available on Corporate NPS of Rs 95,900. In this way, you will get a total deduction of up to Rs 1,70,900, due to which your taxable income will be less than Rs 12 lakh (Rs 11,99,100) and your tax liability will become zero.
What will have to be done to get this exemption?
Most companies provide the facility of NPS. You can talk to the HR of your company and get investment done in NPS. This investment is done from your basic salary and the result will be that your in-hand salary every month will be reduced. The good thing will be that you will be able to get additional tax exemption. If your company does not have the facility of NPS, then talk to HR once, they will guide you on this.
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