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Pay zero income tax on Rs 10 lakh salary; double-check your calculations to save money.
Taxpayers earning more than Rs 10 lakh typically pay hundreds, if not lakhs, in income tax. You will not have to pay a single penny if you invest in the appropriate tools.
Taxpayers who earn more than Rs 10 lakh have to pay thousands of rupees in income tax. Even if the salary is a little more than Rs 10 lakh, there are various strategies by which taxpayers can save a lot of money on income tax. You may not have to pay any income tax at all if you take advantage of all of the available deductions.
You will need to accurately assess the savings and expenses in order to take full use of the tax exemption choices accessible to taxpayers. The best part is that you don’t even need a financial advisor for this because you can teach yourself how to save money on taxes.
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For example, if you make around Rs 10,50,000 per year and are under the age of 60, you will be subject to the 30% income tax bracket. Here’s how to save money on taxes:
1. Take a basic tax deduction of Rs.50,000.
Rs 10,00,000 = Rs 10,50,000 minus Rs 50,000
2. You can now begin your savings by investing in products that provide rebates under Section 80C of the Internal Revenue Code. You can save up to Rs 1.5 lakh by investing in EPF, PPF, ELSS, and NSC, and up to Rs 1.5 lakh annually by paying tuition expenses for two children.
Rs 10,000,000 – Rs 1,50,000 = Rs.8,50,000
3. To qualify for a rebate under section 80CCD (1B) of the Income Tax Act, invest up to Rs 50,000 annually in the National Pension System (NPS) programme.
Rs.8,00,000 = Rs.8,50,000 – Rs.50,0000
4. If you owe money on a home loan and your annual interest is more than Rs 2 lakh, you can save up to Rs 2 lakh under section 24B of the Income Tax Act.
Rs 8,00,000 minus Rs 2,00,000 equals Rs 6,00,000
5. You can also receive a refund for health insurance premiums of up to Rs 25,000. Section 80D of the Internal Revenue Code allows you to deduct the cost of preventative healthcare check-ups for your spouse, children, and yourself. Furthermore, if your parents are older citizens, purchasing health insurance for them can help you qualify for an additional deduction of up to Rs 50,000.
Rs 5,25,000 = Rs 6,00,000 – Rs 75,000
6. Additionally, the IRS permits taxpayers to deduct the amount provided to organisations that are registered under Section 80G of the Internal Revenue Code. You must share the relevant documentation, including a stamped donation receipt, in order to get the returns. Also read: Xiaomi faces a Rs 653 crore import duty evasion notice from the government
Rs.5,00,000 = Rs.5,25,000 – Rs.25,000
7. Your taxable pay would now be Rs 5 lakh after all deductions. If a taxpayer earns more than Rs 2.5 lakh in India, he or she is liable to pay a 5% tax. As a result, your tax would be Rs 12,500 in this situation (5 percent of Rs 2.5 lakh). However, you are eligible for a tax exemption. Your annual tax will be $0 as a result of this.