Income Tax Rules: Taxpayers can save tax even on income of Rs 10.50 lakh, know how

Income Tax Rules: People need to pay tax on greater income as per the tax slab. Under the outdated tax regime, the Income Tax Rule says that no tax must be paid on annual income as much as Rs 2.5 lakh.

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The season of tax saving has arrived. People incomes extra have began struggling to save tax. The central authorities has given tax exemption on income as much as Rs 7 lakh beneath the brand new tax regime, whereas annual income as much as Rs 5 lakh has been exempted beneath the outdated tax regime. But in case your annual income is greater than these two limits then you’ll have to pay tax.

People need to pay tax on greater income as per the tax slab. Under the outdated tax regime, the Income Tax Rule says that no tax must be paid on annual income as much as Rs 2.5 lakh. There is a provision of 5% tax on income of Rs 2.5-5 lakh. Whereas 20% tax is charged on annual income of Rs 5-10 lakh. There is a 30% tax slab on annual income of Rs 10 lakh and above.

Tax can be saved even on income of Rs 10.50 lakh

According to this, in case your annual income is Rs 10 lakh then you’ll have to pay 30% tax. However, if you need, you’ll not need to pay even a single rupee tax. Not solely this, even in case your wage is Rs 10.50 lakh, you can save the whole quantity of tax by investing and taking benefit of exemptions.

How can you save tax on income of Rs 10.50 lakh?

1. A rebate of as much as Rs 50 thousand is on the market as customary deduction. In such a scenario, tax will now be levied on Rs 10 lakh.

2. By investing in schemes like PPF, EPF, ELSS, NSC, you can save tax of Rs 1.5 lakh beneath Section 80C of Income Tax. Now if we subtract Rs 1.5 lakh from Rs 10 lakh, Rs 8.5 lakh will come beneath tax.

3. Similarly, in the event you individually make investments as much as Rs 50,000 yearly within the National Pension System (NPS), then beneath Section 80CCD (1B), you get assist in saving income tax of extra Rs 50 thousand. Now if we subtract Rs 50 thousand extra, Rs 8 lakh will come beneath the tax internet.

4. If a house mortgage can be taken, then tax saving of as much as Rs 2 lakh can be achieved on its curiosity beneath Section 24B of Income Tax. If you subtract one other Rs 2 lakh from Rs 8 lakh, the full tax income will likely be Rs 6 lakh.

5. By taking a medical coverage beneath Section 80D of Income Tax, you can save tax as much as Rs 25 thousand. Your identify, your spouse and kids’s names needs to be there on this medical health insurance. Apart from this, in the event you purchase medical health insurance within the identify of your dad and mom, you can get an additional low cost of as much as Rs 50,000. In this case, if we subtract 75 thousand from Rs 6 lakh, the full tax legal responsibility will likely be Rs 5.25 lakh.

6. If you donate to any group, you can avail tax profit of as much as Rs 25,000. Under Section 80G of Income Tax, you can declare tax deduction as much as Rs 25,000 on the quantity given as donation. After deducting Rs 25 thousand, your income will now come within the tax slab of Rs 5 lakh. According to Income Tax guidelines, no tax must be paid beneath the outdated tax regime on income as much as Rs 5 lakh.

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