Income tax calculator: Paying your income in tax often troubles people. This is the reason why people follow many options of tax savings. But now even if your salary is Rs 12 lakh, with smart planning you can save money by doing good tax savings. Yes, in this new financial year you can do zero tax that too without the help of any chartered accountant. So let’s understand how and with the help of which smart tips you can do tax-saving.
New Financial Year
The new financial year has started from April 1. Now taxpayers have started planning from filing tax to tax savings. Do you know that even if your annual income is Rs 17 lakh, you can save tax. Now the question is but how? So this feat can be achieved by taking advantage of tax exemption options like correct tax planning and section 80C, 80D, HRA, NPS. With the help of these options and correct planning, you can reduce your income of Rs 17 lakh to zero. So let’s understand how this can happen and what planning will have to be done?
How to make it tax free
For working people, understanding the breakup of their salary (CTC Breakup) is always considered the most important. This is especially important when it comes to tax savings. If the basic salary is 30% of CTC and you are increasing it to 40%, then it also affects other allowances, deductions and tax exemptions. By the way, under the new tax regime, with the right planning, the taxable income can be reduced by this much, and salary up to Rs 17 lakh can also be zero tax. So let’s know how you can save income tax with smart breakup.
New tax system
If you are choosing the option of the new tax regime, then standard deduction can prove to be a very beneficial option for you. From the year 2024-25, in the new system, employees can get standard deduction of up to ₹ 75,000. That is, if the annual income is ₹ 12 lakh, then after deduction in it, the taxable income will be around ₹ 11.25 lakh only. This will benefit you in that the tax liability will be less and the savings will be more. The most important thing is that this deduction can be deducted directly from your income without any extra documents or investment.
How does your salary slip look?
Let’s assume that your gross salary is around ₹ 17,24,385 or ₹ 17,84,981. So now if you divide it in the format of 30% and 40% of basic salary, then the basic salary will be around ₹5,17,315 and ₹7,13,992 respectively.
Mobile and conveyance reimbursement
Now let’s talk about mobile and conveyance reimbursement. Actually these two components are fixed. Let’s assume mobile reimbursement: ₹50,000 and conveyance reimbursement: ₹2,40,000. In such a situation, whether the basic is 30% or 40%, the limit of these allowances remains the same.
How will the tax become zero
But the thing to think about is that if you have done the right planning, then what will happen if they are shifted to the tax-free zone? Yes, these are the secret strategies that every working person should know, without heavy documents or experts, so that they can pay ZERO tax on a salary of 17 lakhs.
Save tax through salary breakup
Now let’s talk about EPF, NPS and gratuity. Real tax saving can start in this. Suppose if the basic salary is 30% of CTC, then the PF part can be around ₹62,078, and around ₹85,679 on 40% basic. NPS will contribute 14% to this, which will be up to ₹72,424 and ₹99,959 respectively. While gratuity is also linked to the basic salary, in which ₹24,883 on 30% basic, and ₹34,343 on 40% basic. In this, minus the PF contribution on the total gross gratuity pay. Then the gross pay at 30% basic will be ₹16,37,424 and at 40% basic it will be ₹16,64,959.
Understand the calculation
According to some experts, you can get tax exemption of up to ₹50,000 on mobile reimbursement and ₹2,40,000 on conveyance reimbursement. But for this it is necessary to follow some things. Also, if we deduct exemptions like mobile and conveyance reimbursement from the gross salary, then the net pay at 30% basic can be ₹13.47 lakh and at 40% it can be ₹13.74 lakh. On the other hand, if you reduce the standard deduction by ₹ 75,000, then the taxable salary can be ₹ 12,72,424 at 30% of the basic and ₹ 12,99,959 at 40% of the basic. That is, after reducing the standard deduction and NPS (which helps in tax exemption) contribution, your taxable income will be only ₹ 12 lakh, which leads to huge tax savings. (Note: The news is based on general information only, get all the information from an expert before filing tax)
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