Tax Deduction in New Regime: Under the new regime of income tax, the government has excluded income up to Rs 12 lakh from the tax purview. But, experts say that by taking advantage of the exemption, tax exemption can be taken on income up to Rs 14.65 lakh.
Finance Minister Nirmala Sitharaman has made a big announcement regarding income tax in Budget 2025. She has directly excluded the annual income of Rs 12 lakh from the purview of income tax. This decision of the Modi government has given a big relief to the middle class and they will also have more money in their hands for spending, which can be used for their savings and needs. The government has given this exemption in the new tax regime.
In the budget, the Finance Minister had said that now there will be no tax on income up to Rs 12 lakh, but experts say that if the annual income of a salaried person is up to Rs 14.65 lakh, then also there will be no tax. You are not believing it, but the expert has told a very simple way that how you can bring even the income of up to Rs 14.65 lakh under the scope of zero tax.
What is the mathematics of exemption
Suppose the annual income of a salaried person is Rs 14.65 lakh, out of which half the money i.e. 50 percent goes in the basic salary, while the remaining 50 percent is given in the form of other items and allowances. In this way, his amount of Rs 7,32,500 will go in the basic salary. On this basis, the exemption to be given further will be calculated.
Where will you get such a discount
The government gives a tax exemption of Rs 75,000 in the form of standard deduction in addition to Rs 12 lakh. Apart from this, tax exemption is also available on the contribution of 12% of the basic salary made by the employer to the Employees Provident Fund, which will be Rs 87,900. Apart from this, tax exemption will also be available on the contribution of 14% of the basic salary made by the employer on the NPS account, i.e. Rs 1,02,550. Tax exemption is available on EPS under section 80CCD(1) of Income Tax and on contribution to NPS under 80CCD(2).
How much will be the total tax exemption
The total tax exemption received in standard deduction, EPS and NPS will be Rs 2,65,450 and if this amount is deducted from Rs 14.65 lakh, then the taxable income will be Rs 11,99,550, which will be less than Rs 12 lakh and it will come under the scope of Rs 12 lakh tax exemption issued by the government and this entire income will become tax free.
How much money will be saved in tax
If this much tax was not waived by the government and the benefit of tax deduction was not given on EPS and NPS, then thousands of rupees of tax would have to be paid on the income of Rs 14.65 lakh. In the new regime, 5% tax (Rs 20,000) will be levied on income of Rs 4 to 8 lakh, 10% tax (Rs 40,000) will be levied on income of Rs 8 to 12 lakh, 15% tax will be levied on income of Rs 12 to 14.65 lakh, if the standard deduction of Rs 75,000 is removed from this, then 15% tax i.e. Rs 28,500 will be levied on Rs 1.90 lakh. In this way, a total tax of Rs 88,500 will be saved.
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