For this, you have to keep the savings and expenses in such a way that you can take full advantage of the tax exemption available on it.
Income Tax Savings: If your annual salary is over Rs 10 lakh, you will have to pay the government a large part of your earnings in the form of tax. However, if you think that you have no way to save tax, you are wrong. Even if your salary is Rs 10.5 lakh per annum, you will not have to pay a single rupee as tax. Let us tell you here easy ways to save tax.
For this, you have to keep the savings and expenses in such a way that you can take full advantage of the tax exemption available on it.
Suppose your salary is Rs 10,50,000 per annum, and your age is less than 60 years, that means you will come under the 30% slab.
1. First you deduct Rs.500000 as the standard deduction
10,50,0000-50,000 = Rs 10,00,000
2. After this, you can save Rs 1.5 lakh under 80C. In this, you can take advantage of income tax exemption on investment in EPF, PPF, ELSS, NSC and up to Rs 1.5 lakh annually in the form of tuition fees for two children.
10,000,000- 1,50,000 = Rs.8,50,000
3. If you invest up to Rs 50,000 annually in the National Pension System or NPS then under section 80CCD (1B) of the Income Tax Act, you can get exemption in income tax.
8,50,000-50,0000 = Rs.8,00,000
4. If you have taken a home loan, you can claim tax exemption on the interest of 2 lakhs under section 24B of income tax.
8,00,000-2,00,000 = Rs.6,00,000
5. One can claim a deduction of up to Rs 25,000 for health insurance premium including the cost of preventive healthcare check-up for spouse, children and yourself under Section 80D of Income Tax. Apart from this, if you buy health insurance for the parents, you can get an additional deduction of up to Rs 50,000. The condition is that the parents should be senior citizens.
6,00,000-75,000 = Rs.5,25,000
6. Under Section 80G of Income Tax, you can claim a tax deduction on the amount given in the form of donation or donation to organizations. Suppose you made a donation of Rs 25,000, you can take a tax exemption on it. However, you will have to submit documents to confirm the donation or donation. A stamped receipt should be received from the institution to which you donate or donate. This will be the proof of donation that has to be submitted at the time of tax deduction.
5,25,000-25,000 = Rs.5,00,000
7. Now, you have to pay tax only on the income of Rs 5 lakh and your tax liability will be Rs 12,500 (5% of 2.5 lakh). But, since the exemption is Rs 12,500, he will have to pay nil tax in the slab of Rs 5 lakh.
Total Tax Deduction = 5,00,000
Net Income = 5,00,000
Tax Liability = Rs.0
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