Income Tax Savings: As our earnings rise, so does our tax liability; however, if tax planning is done correctly, tax liability can be reduced significantly, and even zero tax can be paid.
Income Tax Savings: If you earn more than 10 lakh rupees per year and pay a large portion of your earnings to the government in the form of tax, you can save money on your taxes. If you believe that because you have no way to save tax, paying tax is the only option, you are mistaken. If your annual salary is Rs 10,50,000 and you are under the age of 60, you will be in the 30% tax bracket.
1- First, deduct Rs.50,000 as a standard deduction (10,50,0000-50,000 = Rs.10,00,000).
2- As a result of this, you can save 1.5 lakh rupees under 80C. This allows you to claim income tax exemption on investments in EPF, PPF, ELSS, and NSC, as well as up to Rs 1.5 lakh in tuition fees for two children per year.
10,000,000 minus 150,000 equals Rs 8,50,000
3- If you invest up to Rs 50,000 per year on your behalf in the National Pension System or NPS, you can save income tax separately under section 80CCD (1B) of the Income Tax Act.
8,50,000 minus 50,000 = Rs.8,00,000
4- If you have a home loan, you can claim a tax exemption on the interest of up to 2 lakhs under section 24B of the Income Tax Act.
Rs.6,00,000 = Rs.8,00,000-2,00,000
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5- Under Section 80D of the Income Tax Act, you can claim a deduction of up to Rs 25,000 for health insurance premiums, including the cost of preventive healthcare check-ups for your spouse, children, and yourself. Aside from that, if you purchase health insurance for your parents, you can claim an additional deduction of up to Rs 50,000.
6,00,000-75,000 = Rs.5,25,000
6- You can claim a tax deduction under Section 80G of the Income Tax Act for any amount given in the form of a donation or a donation to an organisation. If you make a donation of Rs 25,000, you can claim a tax deduction for it. You will, however, be required to submit documentation to confirm the donation or donation. The institution to which you donate or donate should provide you with a stamped receipt. This is the proof of donation that must be submitted when claiming a tax deduction.
5,25,000 minus 25,000 equals Rs.5,00,000
7- As a result, you will only have to pay tax on income of Rs 5 lakh, and your tax liability will be Rs 12,500. (5 percent of 2.5 lakh). However, because the exemption is Rs 12,500, he will have to pay no tax in the Rs 5 lakh slab.
Total Tax Deduction = Rs 50,000 Net Income = Rs 50,000
Tax Liability = Rs 0
