After the announcement regarding income tax in the budget, the confusion of the people has increased. Old tax system is beneficial or new. Here we are telling you the method where you will be charged zero tax even on an income of Rs 10 lakh.
In this year’s budget, Finance Minister Nirmala Sitharaman has made a big announcement regarding income tax. Under the new tax system, now people will not have to pay any tax on income up to Rs 7 lakh. If we say that you can increase this limit up to an income of 10 lakhs, then what… Yes, here we are going to tell you the method which will make your income up to 10 lakhs tax free.
First, let us know what changes have been made in the new tax system. Finance Minister Nirmala Sitharaman said in her budget speech that under the new tax regime, rebate will be given on the tax on taxable income up to Rs 7 lakh. That means the tax that will be generated will be refunded as rebate, which will make your income of Rs.7 lakh tax free.
Basic tax exemption now up to Rs 3 lakh
By the way, the government has increased the scope of basic tax exemption to Rs 3 lakh in the new tax regime this year. While no such change has been made in the old tax system i.e. the tax exemption limit is still kept at Rs 2.5 lakh. Along with this, in the new tax system, now people will also get the benefit of standard deduction of Rs 50,000, that is, in total, people will not have to pay any income tax on their income up to Rs 7.5 lakh.
The special thing about the new tax system is that it does not provide any kind of savings or tax exemption, while in the old tax regime, you get the benefit of tax saving from home loan to insurance policy.
7 lakh tax-free even in the old tax system
Even if you follow the old tax regime, your income up to Rs 7 lakh will remain tax free. Let’s assume that your income is Rs 5 lakh and under 80 (C) you can get tax exemption on savings up to Rs 1.5 lakh. At the same time, the benefit of standard deduction of Rs 50,000 will also be available. That means your income of Rs 7 lakh will become taxable income of Rs 5 lakh.
Under the old tax system, tax rebate is made on income up to Rs 5 lakh. That is, the tax of Rs 12,500 on your income will be waived under section 87 (A).
Zero tax on income of 10 lakhs
Now let us know how your income up to Rs 10 lakh will be tax free. In this regard, tax expert Abhishek Rastogi says that if a taxpayer plans properly under the old tax system, then he can make income of more than Rs 10 lakh tax-free, because there are many types of tax rules in the old tax system. Get discount.
No change has been made regarding the tax slab in the old tax system. That is, income from 0 to 2.5 lakh rupees is tax free, while the tax calculation on income above 2.5 lakh rupees will be between 5 to 20 percent according to the slab.
Understand the complete calculation to save tax
- First of all, you can reduce the standard deduction of Rs 50,000 from your total income.
- In this way your taxable income will be reduced.
- In the old tax system, you get tax exemption on savings of up to Rs 1.5 lakh under Section 80 (C). This income will be less than your total income.
- For 80(C) you can avail tax exemption on investment up to Rs 1.5 lakh in Insurance Policy, EPF, PPF, Equity Linked Savings Scheme, Mutual Fund, Sukanya Samriddhi Yojana, Post Office Savings Scheme etc.
- Under section 24B, you get tax exemption on home loan interest up to Rs 2 lakh. That is, you can also deduct this from your income and after that the remaining income will be your taxable income.
- In the old tax regime, the government gets a separate tax exemption under 80CCD (1B) on investment up to Rs 50,000 in the National Pension System (NPS).
- Apart from this, under 80 (D) you can make income up to Rs 25,000 tax free by taking health insurance. You will get this benefit for the health insurance policy in the name of your wife and children. Whereas if your parents’ names are also included in the policy, then the exemption limit goes up to Rs 50,000.
- At the same time, you get tax rebate under 87 (A) on taxable income up to Rs 5 lakh.
In this way, you can make total income of more than Rs 10 lakh as tax-free income.
