Not a Single Rupee Tax Will Have to Be Paid on Income of Rs 10 Lakh

Income Tax Saving: Earning Rs 10 Lakh Annually… Still No Income Tax of Rs 1 Will Be Levied, Know How Much Money Will Be Saved with the New Tax Slab

Finance Minister NirmalaSitharaman presented the country’s general budget on 23 July. The new income tax slabs introduced in the latest budget provide significant relief to taxpayers. If you earn Rs 10 lakh annually, you can avoid paying any income tax by strategically using available deductions and exemptions. Here’s how you can save money under the new tax regime.

Understanding the New Tax Slabs

The government has restructured the income tax slabs, allowing more flexibility and reducing the tax burden on individuals. For an annual income of Rs 10 lakh, it’s essential to understand how to maximize the benefits offered by these changes.

Utilizing Deductions

One of the primary ways to reduce your taxable income is through deductions. Under Section 80C of the Income Tax Act, you can claim up to Rs 1.5 lakh for various investments and expenses, including:

• – Public Provident Fund (PPF)
• – Employee Provident Fund (EPF)
• – Life Insurance Premiums
• – National Savings Certificates (NSC)
• – Equity Linked Savings Schemes (ELSS)

Additional Exemptions

Apart from Section 80C, you can take advantage of other exemptions to further lower your taxable income. These include:

Section 80D Health insurance premiums for yourself, your spouse, children, and parents, allowing a deduction of up to Rs 25,000 (Rs 50,000 for senior citizens).

Section 80E Interest on education loans, where the entire interest amount paid can be claimed as a deduction.

Section 80G Donations to specified charitable institutions and relief funds.

Standard Deduction

The standard deduction of Rs 50,000 is available to all salaried employees, directly reducing the taxable income without requiring any investment or expense proof.

Home Loan Interest

If you have taken a home loan, you can claim up to Rs 2 lakh on the interest paid under Section 24(b). This significantly lowers your taxable income, especially if you have a high-value loan.

NPS Contributions

Contributions to the National Pension System (NPS) are eligible for an additional deduction of Rs 50,000 under Section 80CCD(1B). This deduction is over and above the Rs 1.5 lakh limit under Section 80C.

Calculation Example

Let’s consider a practical example for an individual with an annual income of Rs 10 lakh:

Section 80C Deductions Rs 1.5 lakh

Health Insurance Premiums (Section 80D) Rs 25,000

Standard Deduction Rs 50,000

Home Loan Interest (Section 24) Rs 2 lakh

NPS Contributions (Section 80CCD(1B) Rs 50,000

By claiming these deductions, the taxable income reduces from Rs 10 lakh to Rs 5.75 lakh. Under the new tax regime, the tax calculated on Rs 5.75 lakh would be much lower, and further adjustments can lead to a zero tax liability.

Conclusion

By effectively using the deductions and exemptions available under the new tax slabs, it’s possible to earn Rs 10 lakh annually and not pay a single rupee in income tax. Understanding these provisions can lead to significant savings and more efficient financial planning for taxpayers.