The budget (Budget 2024) has been presented by Finance Minister Nirmala Sitharaman. Now people want to know what changes have happened in income tax. Let us tell you that no change has been made in the income tax in this budget.
The budget (Budget 2024) has been presented by Finance Minister Nirmala Sitharaman. Now people want to know what changes have happened in income tax. Let us tell you that no change has been made in the income tax in this budget. If you choose the new tax system, you will be able to save tax up to Rs 7.80 lakh. A new tax regime was introduced by the government in the financial year 2020-21. Under this, the number of slabs for deducting income tax was increased, but the good thing is that the tax rate was reduced. However, in this you do not get the exemption of all other tax deductions except two deductions, which you get in the old tax system.
No tax up to Rs 7 lakh
If we talk about this year i.e. financial year 2023-24, then this time those choosing the new tax regime will not have to pay any tax up to Rs 7 lakh. Even though the government has given you tax exemption in the new tax regime on salary up to Rs 7 lakh, but even if your salary is up to Rs 7.80 lakh, you are still going to benefit in the new tax regime. Let us understand how.
The government has made some changes in the last budget to make the new tax system more attractive as compared to the old tax system. Under this, you do not have to pay any tax up to Rs 3 lakh. Whereas if your taxable income is up to Rs 7 lakh, then you will also get tax exemption on Rs 3-7 lakh i.e. the remaining Rs 4 lakh. Also, to make it more attractive, the government has given the benefit of two types of deductions.
1- Standard Deduction
Employed people get a standard deduction of Rs 50 thousand in the old tax system. That means, no matter what your salary is, you will not have to pay any tax on Rs 50 thousand. In the last budget, it was also included in the new tax system. In this way, you will not have to pay any tax on your salary, not Rs 7 lakh, but up to Rs 7.50 lakh, because Rs 50 thousand will be reduced from your taxable income due to standard deduction.
2- Corporate National Pension System
You can get some additional exemptions over and above the standard deduction by making contributions to NPS through your employer. The tax exemption that any employee gets on NPS is available under 80CCD. There are also two sub-sections in this – 80CCD(1) and 80CCD(2). There is another sub section of 80CCD(1) 80CCD(1B). In this, you get exemption of Rs 1.5 lakh under 80CCD(1) and Rs 50 thousand under 80CCD(1B), but 80CCD(2) will give you income tax exemption even above this Rs 2 lakh.
How to get additional exemption under 80CCD(2)
Under this, you will get rebate on the investment made by your employer in NPS. Many businesses get tax exemption by showing this investment as a business expense in their profit and loss statement. Under this, employees of private companies can invest up to 10 percent of their basic salary and dearness allowance in NPS and you will get tax exemption on it. Whereas if you are a government employee then this figure can be up to 14 percent for you.
How will salary up to Rs 7.80 lakh be tax free?
Let us assume that your package is Rs 7.80 lakh. In such a situation, your basic salary will be at least 50 percent of your CTC. Meaning your basic salary was Rs 3.90 lakh. Under 80CCD(2), you can get your employer to invest 10 percent of it i.e. up to Rs 39 thousand in the corporate NPS account, on which you will not have to pay any tax. So if your salary is Rs 7.80 lakh, then you will get standard deduction of Rs 50 thousand on it and tax exemption on corporate NPS of Rs 39 thousand. In this way, you will get a total deduction of up to Rs 89,000, due to which your taxable income will be less than Rs 7 lakh (Rs 6.91 lakh) and your tax liability will become zero.
What has to be done to get this discount?
Most of the companies provide NPS facility. You can invest in NPS by talking to the HR of your company. This investment is made from your basic salary and the result will be that the inhand salary you receive every month will be reduced. The good thing will be that you will be able to get additional tax exemption. If there is no NPS facility in your company then talk to HR once, he will guide you on this.
