Tax Free Income: In this year’s budget, Finance Minister Nirmala Sitharaman has exempted those having income up to Rs 12 lakh from paying tax. Salaried people can claim an additional standard deduction of Rs 75,000. If your income is up to Rs 13.7 lakh, you can avoid paying tax.
Tax Free Income: On the day of the budget, there was a lot of discussion about the fact that a salaried person whose annual income is up to 12 lakh rupees will not have to pay any tax. In the case of a non-salaried person, this amount is Rs 12 lakh. In the new tax regime, there is a separate standard deduction of Rs 75 thousand for the salaried class, due to which they get tax exemption on this additional amount. Now we are telling you such a Jugaad, by which a salaried person can save tax on an additional income of Rs 96 thousand under the new tax regime.
Under Section 80CCD(2), contribution of up to 14% of the basic salary of a salaried person is eligible for tax deduction in the National Pension Scheme (NPS). This limit is lower in the old tax regime. 10% of the basic salary is eligible for tax deduction. A person earning ₹13.7 lakh annually can save tax of about ₹96,000 annually by contributing to this pension scheme.
96000 rupees can be saved annually
Suppose a person is earning 13.70 lakh rupees annually. Let us assume that the basic salary will be 6.85 lakh rupees. In such a situation, that person has to contribute 95,900 rupees annually to NPS at the rate of 14 percent. If we add 75,000 rupees of standard deduction, then it will reach 13.70 lakh rupees. That is, no tax will have to be paid till this much. However, this facility is possible only when the employer shows NPS in the cost to company (CTC). Employees cannot take advantage of it by investing in NPS themselves.
Not much enthusiasm is being seen about NPS
There is not much enthusiasm among investors towards this scheme started 10 years ago. Even now only about 22 lakh people are investing in NPS. The reason behind this is the lock in period. As per the rules of NPS, the investor will be allowed to withdraw only 60% of the funds even after the completion of the time limit. The remaining 40% will have to be invested.
