Even when you earn a high salary it’s possible to bring down your income tax to nil. Let’s find out how you can do that.
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.
The income tax calculator helps you understand the tax calculation process and also helps you save tax by letting you experiment your investment declarations. The income tax calculator advises you on how to save maximum tax.
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