Salary of 20 lakhs, No Income Tax

Step 1: Open the Income Tax Calculator

Step 2: Key in your salary details

Step 3: Compute Income Tax

As you see, you have a Gross Salary of INR 20 lakhs, so, you are supposed to pay tax of INR 351000 if you choose the new regime. As of now, New regime is beneficial to you.

Now, let me show you how to bring your tax to nil.

Step 4: Declare your contribution to National Pension Scheme(NPS)

Let’s declare your NPS contribution to Section 80CCD(2) which is the only deduction allowed in New regime. This deduction is also allowed in the old regime.

Now, Compute Tax

Your tax liability in New regime has come down to INR 335400.

Step 5: Declare your House Rent

As you see, your tax has come down to INR 211077 as your HRA exemption is now calculated. At this point onwards old regime is beneficial to you.

Step 6: Declare your investments under Section 80C

Section 80C has a limit of INR 1.5 lakhs and it includes investments on Life Insurance Premium, Children’s education, Housing Loan Principle repayment and so on. Let’s declare those.

As you see the tax has come down to INR 194226

Step 7: Declare your investments under Section 80D

As you see the tax has come down to INR 178626

Step 8: Declare interest on Housing Loan

Now the tax has come down to INR 116484

Step 9: Declare interest on education loan

Now the tax has come down to INR 79044

Step 10: Declare donations to approved funds and charities

Now the tax has come down to INR 29124

Step 11: Declare medical expenses against handicapped dependant

Now the tax has come down to 0

Note that you have received Standard deduction of INR 50000, and a rebate of INR 12376.