On July 23rd, Finance Minister Nirmala Sitharaman presented the country’s annual budget. She announced significant reductions under the New Tax Regime and increased the Standard Deduction from 50,000 to 75,000 rupees. Additionally, she revised the tax slabs for income tax.
Following these changes, individuals earning up to 7.75 lakh annually under the New Tax Regime will not have to pay any taxes. However, if your salary is 10 lakh rupees, let’s find out how you can save it on your entire income and not pay a single rupee against income tax.
To save money on an income of 10 lakh rupees, one needs to opt for the Old Tax Regime instead of the new one. Under this option, you’ll have to claim various types of deductions, but if you don’t claim the deductions, you’ll have to pay a 20% tax as per the slab of the Old Tax Regime. However, if you claim tax deductions, you can save the entire tax on an income of 10 lakh rupees.
Tax Savings Strategies
Under the Old Tax Regime, individuals are eligible for a standard deduction of up to 50,000 rupees. Consequently, the tax will apply on an income of 9.50 lakh rupees.
Investments in schemes like PPF, EPF, ELSS, and NSC can lead to tariff savings of up to 1.5 lakh rupees under Section 80C of the Income Tax Act. This reduces taxable income to 8 lakh rupees.
Also Read: Benefit Of Upto Rs. 17,500 To Salaried Employees In The Updated New Tax Regime; See How
Deducting 75,000 from 5.50 lakh rupees results in a total tax liability of 4.75 lakh rupees, which falls below the 5 lakh rupees threshold of the Old Tax Regime. This means you won’t have to pay any tax on an annual income of 10 lakh rupees.
If an annual income of 10 lakh rupees and opts for the New Tax Regime, they will receive a standard deduction of 75,000 rupees instead of 50,000 rupees. This means their total taxable income will be 9 lakh 25 thousand rupees, requiring them to pay only 42,500 rupees in taxes instead of 52,500 rupees. This implies that under the New Tax Regime, those earning 10 lakh annually can save 10,000 rupees more.
Also Read: Huge Drop In Gold Prices Post-Budget Announcement – Check Current Rates
