This is very big news for taxpayers because according to the new rules of the government, now those earning up to 10 lakhs will not have to pay a single rupee tax. Come let’s know the whole news in detail
In the budget of the year 2023, Finance Minister Nirmala Sitharaman (FM Nirmala Sitharaman) has made a big announcement regarding Income Tax. Now the income taxpayers adopting the new tax regime will not have to pay any tax on income up to Rs 7 lakh.
Income tax will have to be paid on annual income above Rs 7 lakh. But, even if a salaried person with an annual salary of Rs 10 lakh does tax planning wisely, he will not have to pay any tax. Tax expert says that to make the income of 10 lakh tax free, he will have to choose the old tax system.
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. 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, from home loan to insurance policy, tax saving is available.
Zero tax on income of 10 lakhs
According to a Live Mint report, according to RSM founder Dr. Suresh Surana (Dr. Suresh Surana, Founder, RSM India), even if the total income from a salaried person’s job is Rs 10 lakh, he will not have to pay tax. If a taxpayer plans properly under the old tax system, then he can make income of more than Rs 10 lakh tax-free, because of the many exemptions available in the old tax system.
Standard deduction
Dr. Surana says that up to Rs 50,000 is available as standard deduction. First deduct it from your income. After deducting this Rs 50,000 from Rs 10 lakh, your tax net will be Rs 9,50,000.
Section 80C
Under Section 80C of the Income Tax Act in the old tax regime, you can save Rs 1.5 lakh by investing in EPF, PPF, ELSS, NSC. After deducting this Rs 1.5 lakh, your tax liability will be reduced to Rs 8.5 lakh.
Section 80CCD
By investing up to Rs 50,000 annually in the National Pension System (NPS), you can save Rs 50,000 in income tax under section 80CCD (1B). Deduct this 50 thousand rupees also from the total income. Now your 7.5 lakh income will come under the tax net.
Section 24b
If you have taken a home, then you can save tax of Rs 2 lakh annually. Home loan is exempt under section 24B of income tax. Minus this also in your annual income. Now only Rs 5.50 lakh will come under the tax net.
Section 80D
You can save tax up to Rs 25,000 by taking a medical policy under section 80D of the IT Act. Apart from this, if your parents are senior citizens, then you can get an additional deduction of up to Rs 50,000 by purchasing health insurance in their name. Thus by saving Rs 75,000, your tax liability will come down from Rs 5,50,000 to Rs 4,75,000.
87A
The Income Tax rules clearly state that the tax on an income of Rs 5 lakh is Rs 12,500 (5% of Rs 2.5 lakh). In such a situation, a rebate of Rs 12500 is available under Income Tax Section 87A. Because by taking advantage of all the deductions, you have also come in the slab of 5 lakhs and you will have to pay zero tax.
