No tax upto an income of 10L
The hardest thing in the world to understand is the income tax” said Albert Einstein.
Well, even though the above statement is not 100% correct, but it does have some truth to it. Many people in India don’t understand taxes completely and end up paying more taxes.
Let's see an example:
Case 1: Your salary is INR 10L, and you take no deductions. In that case, it is advisable to stay on the new tax regime, for which you’ll have to pay a total tax of INR 78,000. That’s nearly a cost of an iPhone, which will go into taxes.
Now let’s have a look at a different case.
Case 2: Your salary is the same INR 10L, and you take all the possible deductions. In that case, it will be recommended for you to stick to the old tax regime, where you’ll pay a total tax of INR 0. Which means you’ll save INR 78,000 every year on taxes.
Excited to know how to bring this amount to INR 0? Read along.
Below, we’ll be explaining to you all the possible deductions you can take to reach the zero tax mark.
Now for the first INR 5,00,000 you are liable to pay a tax of INR 12,500 but then Govt. of India gives you the complete amount as a rebate under 87A.
Now we are left with the next INR 5,00,000.
*BTW you’ll be paying zero tax if you are above the age of 60 and earning 10L, for people below 60 the figure would be 9.75L which is still great. Isn’t it?
Coming back to our topic on our list of next deductions, you’ll get a standard deduction of INR 50,000 under section 16(ia).
Next, you can get a deduction of INR 1,50,000 under section 80C (investments like PPF and ELSS Mutual Funds).
Also, you can claim a deduction of up to INR 50,000 if you are saving your money in NPS and this comes under section 80CCD.
Next comes 24(b) and this is for people who are paying installments for their home loan, for this the Govt. gives you a deduction of INR 2,00,000.
And the last will be the deductions for health insurance premium which is capped at INR 25,000 for normal citizens and INR 50,000 for senior citizens.
Now if you sum these up, we’ll be left with a net taxable income of either INR 0 or INR 25,000 which is great.
Another thing to keep in mind, even if your net taxable income is zero in the above-explained case, you are still liable to file your ITR.
Hope you liked today’s article, and I’m pretty certain this is going to help you save some of your hard-earned money.
Let’s meet again at the same place(your inbox) same time, next week. Till then, take care and stay safe.
Traders engaging in future and option trading can be classified as Hedgers, Speculators, and Arbitrageurs.
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