ITR Filing: Recently in the budget, Finance Minister Nirmala Sitharaman has given a big gift to the middle class by making the tax zero on income up to Rs 12 lakh. Under this, if your taxable income is up to Rs 16 lakh, then your tax liability will be zero.
ITR Filing: Recently in the budget, Finance Minister Nirmala Sitharaman has given a big gift to the middle class by making the tax zero on income up to Rs 12 lakh. Under this, if your taxable income is up to Rs 16 lakh, then your tax liability will be zero. However, if you use every investment and reimbursement to the maximum extent, then it is possible that you can also get tax exemption on salary up to Rs 16 lakh. Let’s understand how it works.
First of all, work on your salary structure
At the beginning of the year, there is often an option to change the salary structure. You can decide for yourself how much money you want in reimbursement and how much money as taxable salary. Reimbursement includes options like conveyance, LTA, food-coupon or entertainment, internet or phone bill and petrol. HRA plays an important role in saving tax. Let us know how you can save your tax with the help of all these.
Do take reimbursement
Many things are given to employees by many companies as reimbursement. Let us know about all of them one by one and understand how much money you can save.
Conveyance reimbursement: Under this, you can usually get a reimbursement of about Rs 1-1.5 lakh from the company. Let’s assume that your company gives you conveyance reimbursement of Rs 1.5 lakh, then this much money will become non-taxable for you.
Internet bill: Nowadays, almost every business needs internet broadband. You can get good speed internet broadband for Rs 700-1000 per month. In such a situation, the company also gives almost the same amount in reimbursement. If this component is not in your salary, then include it in the salary and get tax exemption. Let’s assume that under this, you can make Rs 1000 per month i.e. up to Rs 12000 per year non-taxable.
Food or entertainment reimbursement: Earlier this reimbursement used to be available in the form of food coupons, which you can now get in exchange by showing your food bill. Under this, the company usually easily gives around Rs 2000 per month i.e. Rs 24 thousand annually.
Uniform, fuel, books and others: Different companies also give some reimbursement in the name of uniform, fuel, books, magazines, papers etc. Talk to your company’s HR once and ask if these facilities are available there. If you get these reimbursements, you will be able to save tax on some more money. Generally, by combining all these, you can get a reimbursement of up to Rs 3-4000. Let’s assume that you get a reimbursement of Rs 3000 per month, then also you will get the benefit of not paying tax on Rs 36 thousand annually.
Take advantage of deductions too
In the new tax system, you also get some deductions under the Income Tax Act. Let’s know about them.
1- First of all, every employed person gets a standard deduction of Rs 75 thousand. That means, whatever your salary is, just reduce Rs 75 thousand from it with your eyes closed.
2- 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% of their basic salary in NPS in the new tax system. In this way, if your basic salary is Rs 8 lakh, then you can get tax exemption on 14% of it i.e. up to Rs 1,12,000.
Now understand the calculation
This calculation has two parts. The first is reimbursement. If you add all the reimbursements mentioned above, then you can get a total reimbursement of Rs 2.22 lakh. The second part is deduction, under which you will get a total deduction of Rs 1,87,000. That is, a total of Rs 4,09,000 will not be taxed directly from your salary.
Your annual salary was Rs 16 lakh, out of which Rs 4,09,000 will not be taxed. In this way, your taxable salary is left at Rs 11,91,000. In the new tax system, tax on taxable income up to Rs 12 lakh is zero. So in this way you will not have to pay any tax.
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