How to Save Income Tax: In the Union Budget, income up to Rs 12 lakh has been made tax free. But under the new income tax regime, you can make income up to Rs 18 lakh tax free.
Income Tax Tips: In the Union Budget presented in Parliament on February 1, income up to Rs 12 lakh has been made tax free. But if your salary is more than Rs 12 lakh, do you have any option? If you want to make income above Rs 12 lakh tax-free, then you can follow this trick under the new tax regime.
With this trick, you will not have to pay any tax even on a salary of up to Rs 18 lakh. The name of this trick is – salary restructuring. You can restructure your salary structure in such a way that your tax liability becomes zero. Let’s know how.
Way to save tax
If your basic salary and DA is Rs 12.25 lakh, then it can be made tax free through different allowances and benefits. For example, NPS contribution of Rs 1.71 lakh, Rs 4 lakh as motor car facility and Rs 5,000 as gift can be added. In this way your gross salary becomes Rs 18.01 lakh.
How will it be tax free?
NPS contribution: NPS contribution up to 14% of basic and DA is considered tax-free under section 80CCD(2), which can lead to savings of Rs 1.71 lakh.
Gift allowance: Gifts up to Rs 5,000 given by the company are tax-free under section 17(2)(vii) rule 3(7)(iv).
Standard deduction: All salaried employees are eligible for standard deduction up to Rs 75,000.
New income tax bill to be introduced next week
Union Finance Minister Nirmala Sitharaman said on Saturday that she hopes that a new income tax bill will be introduced in the coming week, which will go to the Parliament’s Standing Committee on Finance for scrutiny. The new income tax bill, which is being brought to leave more money in the hands of the common man and simplify the rules, has been approved in the cabinet meeting held on Friday under the chairmanship of Prime Minister Narendra Modi.
