Tax Saving Tips: Finance Minister Nirmala Sitharaman presented Budget-2025 on February 1. The middle class has been given a big relief in the budget. The government announced that there will be no tax on income up to Rs 12 lakh.
Tax will have to be paid according to the slab on income above Rs 12 lakh annually. However, with tax planning, you can save tax even on income above Rs 12 lakh. Sometimes the tax on your salary can also be zero. Even if your annual salary is Rs 13.7 lakh, you can avoid paying any tax by following some steps.
According to tax experts, to make tax zero on income up to Rs 13.7 lakh per annum, one has to invest in the National Pension System (NPS). In the new tax regime, tax deduction is available on NPS contribution up to 14% of the basic salary (plus DA). This deduction is available under IT Act Tech Section 80CCD (2). However, this deduction is available only when the employer/company provides the facility of investing in NPS to the employee.
This is how you can save tax on an annual salary of Rs 13.7 lakh
Let’s assume that an employee’s annual salary is Rs 13.7 lakh. In this, 50% of the basic salary is Rs 6.85 lakh, so the NPS contribution at 14% will be Rs 95,900. The employee can claim tax deduction on the annual contribution of Rs 95,900 in NPS. If the standard deduction of Rs 75,000 is added to this amount, then the total deduction will become Rs 1.70 lakh. In this way, he will not have to pay any tax.
NPS was started in the year 2004.
Let us tell you that if you also want to get a big pension after your retirement, then National Pension System can be a good option for you. NPS is a government scheme, which is linked to the market. NPS was started by the government in 2004. It was opened for the general public in 2009.
