How To Pay No Income Tax on Salary ? – Amazed to see this. How would it be possible to pay no income tax up to income of Rs ten lakhs. How would it be possible since many of job holders including bankers are in tax bracket of 20% To 30%. Every day I encounter with calculation of Income tax on various income and after going through the new section added under 80ccd and 80ccd (2) with increase limit on housing loan interest, I found it possible under hypothetical conditions.
Here are the top ideas through which the Income Tax may be saved on the Salaried Income up to Rs 10 Lakhs.
Assumption have been considered as the Male Salaried employee under 60 years of age with Housing loan and Health Insurance policy and having NPS account opened.
- TAX REBATE – The Income Tax rebate have been granted up to Rs 2,50,000 as basic limit for Male citizen under 60 years. Up to Rs 2,50,000 no tax is being paid.
- CLAIM UNDER 80C – The claim under Section 80C with following investment are tax free up to Rs 1,50,000 of cumulative limit. The various instrument to be invested under Section 80C of Income Tax are ULIP, PPF, EPF, NSC, NPS, ELSS Mutual fund, Tax Shield Fixed Deposit of various Banks, Life insurance premium, Children tuition fees, Housing loan principal portion etc.
- REBATE UNDER 80CCD – Last year budget a new provision was added as Section 80CCD where additional investment up to Rs 50,000 may be granted Tax benefit if invested in NPS. It means the total investment which received the Income Tax benefit under 80C and 80CCD are Rs 1,50,000 plus Rs 50,000, Total of Rs Two Lakhs.
If NPS account are not opened Yet , Learn How To Open eNPS Account Online ?
4. ADDITIONAL NPS BENEFIT – Employer may contribute under 10% of salary or Maximum Rs One lakhs in NPS to get the Tax rebate. If you are lucky enough to receive this your Tax rebate will be boosted by another lakhs of rupees.
5. HEALTH POLICY PREMIUM – If you have taken a health insurance policy, you may get the Tax benefit up to Rs 25,000 per financial year on premium. Read Also : How to Buy Best Affordable Health Insurance Policy?
6. HOUSING LOAN – Housing loan interest benefit of Rs 2,00,000 per year. Buy a dream for best rebate.
7. Transport allowance benefit of Rs 1600 per month or Maximum of Rs 19,200 on declaration basis are exempted from the Income Tax.
8. Annual Medical allowance if paid by the employer are under Income Tax rebate up to rs 15000 defined under 17(2). This is only applicable if reimbursement are made.
9. MEDICAL INSURANCE PREMIUM – Provision are also there to get rebate on medical insurance premium if taken for parents up to rs 30,000
10. LTA i.e. Leave Travel Allowance up to Rs 25000 are exempted under section Section 10(5)
11. FUEL EXPENSE REIMBURSEMENT – Beside this there are also provision made in Income Tax to provide rebate under various other categories including Fuel Expense Reimbursement under section 10 of Income Tax up to the limit of Rs One lacs.
12. PHONE EXPENSES – As per Income Tax Rule 3(7)(ix) Mobile or Phone expenses are consider under rebate up to rs 30,000 or as per the salary structure.
13. NEWS PAPER EXPENSES – In Banks and other organization the reimbursement of Newspaper bills are provided which is under income tax rebate up to rs 14000
14. FREE MEAL – Section 17 (2) income tax rule define – Free meals in excess of Rs. 50 per meal less amount paid by the employee shall be a taxable perquisite 2) Exempt from tax: Following free meals shall be exempt from tax
a) Food and non-alcoholic beverages provided during working hours in remote area or in an offshore installation;
b) Tea, Coffee or Non-Alcoholic beverages and Snacks during working hours are tax free perquisites;
c) Food in office premises or through non-transferable paid vouchers usable only at eating joints provided by an employer is not taxable, if cost to the employer is Rs. 50(or less) per meal. It means If 20 working days are considered in a month total of rs 18000 in a year may be consider as income tax rebate.
If the Calculation are Made for all the provision and Rebate under Income Tax rule,
|Income Tax Rebate Items||Total Limit|
|Deduction Under 80C||1,50,000|
|NPS – Under 80CCD||50,000|
|NPS – 80CCD-2||100,000|
|Parents Health Plan||30,000|
|House Loan Interest||2,00,000|
|Basic Limit Exemption||2,50,000|
|Total Exemption||Rs 10,19,200|
|Income Considered||Rs 10,00,000|
It is to be noted that the Maximum of the benefit are basically provided by almost all the employers. If few of the employers are not considering , employees any get the benefit of other measure which can save Tax up to the limit of Rs 6,00,000. Any query or suggestion are welcome here.