Income Tax Saving: The salaried class waiting for relief on income tax slab has got a shock after Nirmala Sitharaman’s budget speech on Tuesday. After getting relief in the new tax regime, now up to Rs 7.75 will not have to be paid tax.
Income Tax Saving: Finance Minister Nirmala Sitharaman has presented the country’s budget for the seventh time on July 23. The salaried class has once again been disappointed while presenting the budget. The Finance Minister has increased the standard deduction by 50 percent along with the change in the tax slab under the New Tax Regime. Now under the new tax regime, you can claim Rs 75,000 instead of Rs 50,000 as standard deduction. Apart from this, now 10 percent tax will have to be paid on income of 7 to 10 lakhs. Earlier, 10 percent tax had to be paid on income of 7 to 9 lakhs.
No tax of even a single rupee on income of 7.75 lakhs
After the increase in standard deduction, under the New Tax Regime, not a single rupee tax will have to be paid on income of 7.75 lakhs. But if your income is more than this i.e. Rs 10.50 lakh, then can you save income tax? The answer is yes, you will not have to pay even a single rupee tax on annual income of Rs 10.50 lakh. If you also want to save income tax, then for this you will have to select the Old Tax Regime.
You will get a direct benefit of Rs 49,400
You can claim many types of exemptions in the Old Tax Regime. On the other hand, if you go to the New Tax Regime, then you will have to pay 15 percent tax on this income. Under this, 15 percent tax has to be paid on income of 10 to 12 lakhs. After standard deduction, tax of Rs 49,400 is made on this income. Let us know how you can save this tax in the Old Tax Regime?
No tax on income up to Rs 2.50 lakh
Under the old regime of income tax, there is no tax on income up to Rs 2 lakh 50 thousand. But here we will tell you how you can avoid income tax liability on income up to Rs 10.5 lakh. That is, you will not have to pay even a single rupee tax on income up to Rs 10.5 lakh. Let’s know how?
1. If your annual income is Rs 10.50 lakh, then how can you avoid paying income tax. Here we will tell you the complete math of this. On this income, you will first get a discount of Rs 50 thousand under standard deduction. With this, your taxable income of Rs 10.50 lakh is reduced to Rs 10 lakh.
2. Now out of the income of Rs 10 lakh, you can claim savings up to Rs 1.50 lakh under Section 80C of the Income Tax Act. Under Section 80C, you can claim investments made in LIC, PPF, Sukanya Samriddhi children’s tuition fees, mutual funds (ELSS) and EPF. Under this, you can also claim the principal amount of home loan. In this way, your taxable income is reduced to Rs 8 lakh 50 thousand.
3. After this, you can claim Rs 2 lakh under Section 24B of the Income Tax Act. You get this exemption on the interest amount of home loan. After claiming these two lakh rupees, your taxable income is reduced to Rs 6.50 lakh.
4. After this, you can claim medical health insurance up to Rs 25000 under section 80D for tax saving. If your parents are senior citizens, then you can claim Rs 50000 for their health insurance. In this way, if you claim a premium of Rs 75000, then your taxable income comes down to Rs 5.75 lakh.
5. Now you can invest Rs 50000 in National Pension System (NPS) to reduce tax liability. You claim it under 80CCD (1B). That is, now your taxable income here comes down to Rs 5.25 lakh. You can reduce it even more.
6. After this, if you donate Rs 25000 to any institution or trust, then you will get the benefit under Section 80G of Income Tax and your taxable income will be reduced to Rs 5 lakh.
7. On income of Rs 2.50 lakh to Rs 5 lakh, tax of Rs 12500 is 5 percent. But you are given exemption in this by the government. In this way your tax is reduced to zero rupees.
Let us tell you that under the old tax regime, there is a provision of 5% tax on income of Rs 2.5 lakh to Rs 5 lakh. After this, there is a provision of 20% tax on annual income of Rs 5 to 10 lakh. Apart from this, there is a tax liability of 30% on annual income of Rs 10 lakh and above.
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