Income Tax Saving: Form-16 has been issued by the companies. The last date for filing ITR has been fixed by the Income Tax Department as July 31. In such a situation, if you are also thinking of paying tax on income of 10 lakh rupees, then you are wrong.
On a salary of 10.5 lakhs, you fall in the slab of 30 percent tax. Because 30 percent income tax is liable on annual income above 10 lakhs.
This is the complete maths
1. If your salary is 10.5 lakh rupees, then first of all subtract 50 thousand given by the government as standard deduction. In this way your taxable income is now Rs 10 lakh.
2. Now you can claim Rs 1.5 lakh under 80C. In this, you can claim children’s tuition fee, PPF, LIC, EPF, Mutual Fund (ELSS), principal of home loan etc. In this way, your taxable income here has been reduced to Rs 8.5 lakh.
3. You have to invest 50 thousand under National Pension System (NPS) under 80CCD(1B) to make tax zero (0) on salary of 10.5 lakhs. In this way your taxable salary has come down to Rs 8 lakh.
4. Now under Section 24B of Income Tax, you can claim tax exemption on home loan interest of Rs 2 lakh. In this way, now your taxable income has come down to Rs 6 lakh.
5. Under Section 80D of Income Tax, you can claim a premium of 25 thousand rupees medical health insurance for your family (wife and children). Apart from this, senior citizens can claim 50 thousand for health insurance premium paid for parents. After claiming total health insurance premium of 75 thousand, your taxable income has come down to 5.25 lakhs.
6. Now you have to donate 25 thousand rupees to any organization or trust to bring your taxable income to 5 lakhs. You can claim it under Section 80G of Income Tax. On donating 25 thousand, your taxable income came down to Rs 5 lakh.
You will have to pay zero tax
, now your taxable income has been reduced to Rs 5 lakh. On the income of 2.5 to 5 lakh rupees, at the rate of 5 percent, your tax becomes Rs 12,500. But there is an exemption from the government on this. In this case your tax liability becomes zero.
