ITR Filing 2024: Even if you fall in the annual salary bracket of Rs 10.5 lakh, not even a single rupee of yours will be deducted as tax. Let us tell you, the date for filing Income Tax Return (ITR) is near. Penalty may be imposed for not filing the return by July 31.
Tax Free Income: As the income increases, the tax liability also increases. But, if the planning is right, tax can be saved even on higher salary brackets. If your salary is more than Rs 10 lakh annually, then you have to pay a huge tax. But, you have a great way to save tax. Even if you fall in the annual salary bracket of Rs 10.5 lakh, not even a single rupee of yours will be lost as tax. Let us tell you, the date for filing Income Tax Return (ITR) is near. Penalty may be imposed for not filing the return by July 31.
There will be no tax on a salary of ₹ 10.5 lakh
First of all, you have to keep your savings and expenses in such a way so that you can avail the benefit of tax exemption on it.
Suppose your salary is Rs 10,50,000, and your age is less than 40 years, meaning you will fall in the 30% slab.
1- First of all, deduct Rs 50,0000 as standard deduction
10,50,0000-50,000= Rs 10,00,000
2- After this, you can save Rs 1.5 lakh under 80C. In this, you can avail income tax exemption on an amount of up to Rs 1.5 lakh annually in the form of investment in EPF, PPF, ELSS, NSC and tuition fees of two children
10,000,000-1,50,000= Rs 8,50,000
3- If you invest up to Rs 50,000 annually in National Pension System or NPS, then under section 80CCD (1B) of the Income Tax Act, you get help in saving Income Tax separately. 8,50,000-50,0000= Rs 8,00,000
4- If you have taken a home loan, then under section 24B of Income Tax, you can claim tax exemption on interest of Rs 2 lakh.
8,00,000-2,00,000= Rs 6,00,000
5- Under section 80D of Income Tax, you can claim deduction of up to Rs 25,000 for health insurance premium including the cost of preventive healthcare check-up for spouse, children and yourself. Apart from this, if you buy health insurance for parents, then you can get additional deduction of up to Rs 50,000. The condition is that the parents should be senior citizens.
6,00,000-75,000= Rs 5,25,000
6- Under Section 80G of Income Tax, you can claim tax deduction on the amount given as donation to institutions. Suppose you donated Rs 25,000, then you can get tax exemption on it. However, to prove the donation, you will have to submit documents. You should get a stamped receipt from the institution to which you donate. This will be the proof of donation which will have to be submitted at the time of tax deduction.
5,25,000-25,000= Rs 5,00,000
7- So now you will have to pay tax only on the income of Rs 5 lakh and your tax liability will be Rs 12,500 (5% of 2.5 lakh). But, since the exemption is Rs 12,500, he will have to pay zero tax in the Rs 5 lakh slab.
Total tax deduction= Rs 5,00,000
Net income= Rs 5,00,000
Tax liability= Rs 0
(This calculation is given for illustrative purposes only. Before making any investment and filing ITR, please consult your financial advisor or CA)
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