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 1: Open the Income Tax Calculator

Step 2: Key in your salary details

Salary Earnings
Salary Deduction

Step 3: Compute Income Tax

Income Tax Calculator

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.

Declaration to Save Income Tax

Now, Compute Tax

Income Tax

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

New to Income tax? There is nothing to worry about!
Calculate Income Tax with data from your payslip

Step 5: Declare your House Rent

Declare House Rent to Save Income Tax
Income Tax

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.

Declare section 80C to Save Income Tax
Declare Children's education to save income tax
Declare House loan to save income tax
Income Tax

As you see the tax has come down to INR 194226

Step 7: Declare your investments under Section 80D

Declare Medical Insurance to Save Income Tax
Declare Life Insurance for parents to save income tax
Income Tax

As you see the tax has come down to INR 178626

Save maximum Income Tax with the
Free Online Income Tax Calculator!

Step 8: Declare interest on Housing Loan

Declare Section 24b to save Income Tax
Income tax

Now the tax has come down to INR 116484

Step 9: Declare interest on education loan

Declare Section 80E to save Income Tax
Income Tax

Now the tax has come down to INR 79044

Step 10: Declare donations to approved funds and charities

Declare Section 80G to save Income Tax
Income Tax

Now the tax has come down to INR 29124

Step 11: Declare medical expenses against handicapped dependant

Declare Section 80DD to save Income Tax
Income Tax

Now the tax has come down to 0

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

Income Tax Standard Deduction
Income Tax rebate

Try the Free Online Income Tax Calculator

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.