Income tax: Under the new tax system, if your income is ₹62,501 per month, then you will have to pay tax according to the tax slab, which will be in thousands…
Income tax is such a mandatory tax that it is not possible for any employed person to avoid it, and they get salary only when the income tax has been deducted. In the year 2020, Union Finance Minister Nirmala Sitharaman announced the new tax regime to calculate tax, but the old tax regime was also retained. After this, changes were also made in the new tax regime in the year 2023, and now if the annual income is Rs 7,00,000 or less, then rebate is available under Section 87A of the Income Tax Act, and no tax has to be paid. But in the old tax system, the exemption under Section 87A is available only to those whose taxable income is less than ₹ 5,00,000.
In the New Tax Regime, even those earning ₹62,501 will have to pay tax
Now the situation is that if you earn ₹62,500 every month, then your annual income will be ₹7,50,000, and after deducting the standard deduction of ₹50,000 under the new tax system, your taxable income will be ₹7,00,000, and through the rebate available under Section 87A of the Income Tax Act, your tax will become zero, but if your income increases by even one rupee, that is, even if you earn ₹62,501 every month, then you will have to pay tax according to the tax slab, which will be in thousands.
You can save income tax in Old Tax Regime by saving in certain items
But now let us tell you about the old tax system, where taxpayers living in rented houses will pay zero tax despite earning up to ₹70,000 monthly, i.e. ₹8,40,000 annually, by saving in certain items. Let’s do the calculations.
Get HRA Rebate
Those whose monthly income is ₹70,000, usually their Basic Salary is ₹24,500 and House Rent Allowance is ₹12,250. In this sense, if the taxpayer pays ₹15,000 rent to the landlord every month, then he can get tax exemption (HRA Rebate) on ₹1,47,000 annually.
Save under 80C
Apart from this, his provident fund will also be deducted from this salary, which is usually 12 percent of the basic salary, so, in this case this amount will be ₹2,940 per month or ₹35,280 annually, which can be exempted from tax under Section 80C of the Income Tax Act. Now this taxpayer will have to save ₹1,14,720 more in the whole year under Section 80C, which can be done by depositing PPF, Sukanya Samriddhi Account (SSA), children’s tuition fees, premium of life insurance policy etc. In this way, the maximum exemption available under Section 80C, i.e. ₹1,50,000 can be availed.
Taxable income will be less than ₹5,00,000
Now this person has got HRA rebate of ₹1,47,000, and exemption of ₹1,50,000 under section 80C, so, now if he files income tax return under the old tax system, then apart from these two exemption amounts, standard deduction of ₹50,000 will also be deducted from his total income, that is, the total deduction from the total income will be ₹3,47,000, after which the taxable income will remain ₹4,93,000, on which zero tax will have to be paid after the exemption under section 87A of the Income Tax Act.
Now see the full chart
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