On July 23, Finance Minister Nirmala Sitharaman gave the nation’s budget speech for the seventh time. Once again, the salaried class has been let down at the budget presentation. In addition to changing the tax bracket under the New Tax Regime, the Finance Minister also raised the standard deduction by 50%. You can now claim a basic deduction of Rs 75,000 instead of Rs 50,000 under the new income tax regime. Aside from this, income between Rs. 7 and Rs. 10 lakhs will now be subject to 10% tax. Formerly, income between Rs. 7 and Rs. 9 lakhs was subject to 10% income tax.
Not a single rupee in taxes on income above Rs 7.75 lakh
Following the rise in the standard deduction, under the New Tax Regime, you will not have to pay a single rupee tax on an income of Rs 7.75 lakh. But if your income is more than this i.e. Rs 10.50 lakh, can you save income tax? The answer is yes, you will not have to pay a single rupee tax on an annual income of Rs 10.50 lakh. If you also want to save tax, then for this you will have to select the Old Tax Regime. A direct benefit of Rs 49,400 will be received. During the previous tax system, there were numerous exclusions available. However, you will be required to pay a 15% tax on this income if you choose to use the new tax regime. Under this, income between 10 and 12 lakhs is subject to a 15 percent tax. There is a 49,400 rupee tax on this income after the standard deduction. Tell me how you managed to avoid this tax under the previous tax system.
Income up to Rs 2.50 lakh is tax-free.
Up to Rs 2.5 lakh in income, there was no tax under the previous system. However, we’ll explain how to avoid paying taxes in this section on income up to Rs 10.5 lakh. That is, you will not have to pay even a single rupee tax on income up to Rs 10.5 lakh. If your annual income is Rs 10.50 lakh, then how can you avoid paying tax? Here we will tell you the complete calculation of this. On this income, you will first get a discount of Rs 50 thousand under the standard deduction. Due to this, your taxable income of Rs 10.50 lakh is reduced to Rs 10 lakh.
According to Section 80C of the Income Tax Act,
you are now eligible to claim savings of up to Rs 1.50 lakh from your income of Rs 10 lakh. You can claim investments made in mutual funds (ELSS), EPF, LIC, PPF, and Sukanya Samriddhi children’s tuition payments under Section 80C. Also, you may claim the house loan’s principal under this. Your taxable income is therefore decreased to Rs 8 lakh 50 thousand. Following this, you are eligible to claim Rs 2 lakh under the Act Section 24B. You are granted this exception on the interest amount of the home loan. After claiming these two lakh rupees, your taxable income is reduced to Rs 6.50 lakh.
After this, you can claim medical health insurance
up to Rs 25000 under section 80D for tax savings. If your parents are senior citizens, then you can claim Rs 50000 for their health insurance. In this way, if you claim a premium of Rs 75000, then your taxable income will be reduced to Rs 5.75 lakh. You can now lower your tax obligation by investing Rs 50,000 in the National Pension System (NPS). This is deductible under 80CCD (1B). This implies that your current taxable income is only Rs 5.25 lakh. It can be further reduced. After that, your taxable income will be lowered to Rs 5 lakh if you gift Rs 25,000 to any trust or organization. This benefit is provided under Section 80G. A 5% tax of Rs 12,500 is imposed on income between Rs 2.50 lakh and Rs 5 lakh. However, you get a rebate from the government for this. Your tax is therefore lowered to 0 rupees.
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