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Ways to nullify tax income even if you earn Rs 10 lakh
Posted on: 26/Dec/2017 8:10:39 PM
Do you like paying tax? Of course, no one would love to do! In spite of several exemptions and provisions for saving on your tax, paying out of your hard-earned money towards tax is definitely going to burn your pocket. This piece of write-up is to discuss with the ways in which you can bring down your tax liability.
You can make a number of tax exempt investments that can bring down your total liable tax amount. Would you believe that you can even be liable to zero tax when your income falls within Rs 10 lakh if you follow the many different tax-saving investment methods? When your CTC is Rs 9.5 lakh per annum, for instance, below is how you can nullify your liable tax amount.
Investments done under Section 80C
When it comes to reducing taxes, Section 80C comes handy, as there are a number of instruments it comes with for providing total tax exemption of up to Rs 1.5 lakh per annum. Some of the most common investments that can qualify you for Section 80C are listed below
- Life insurance premiums
- Investments made in ELSS schemes
- Fixed deposits made for 5 years
- PPF investments
- Health insurance made under Section 80D
- NSC, KVP investments, etc.
Under health insurance policy, the premiums paid shall be qualified for tax exemption under Section 80D. The total exemption you will be eligible for towards self or family will be Rs 25,000, and this will increase up till Rs 30,000 when you are a senior citizen. You can claim up to Rs 25,000 when you pay for health insurance policy for your dependent parents. When they are senior citizens, this may increase till Rs 30,000. When both the payer and his parents are senior citizens, a total of Rs 60,000 can be totally claimed when you pay for self and parents.
NPS investment under Section 80CCD (1B)
When one makes investment in the National Pension Scheme with the government, an extra tax exemption will be possible. For NPS investments made more than Rs 1.5 lakh, an exemption of Rs 50,000 will be possible as per Section 80C.
Interest paid towards Home loan
If you have taken any housing loan, you can be eligible for tax exemption against the same according to Section 24 under the condition that the house should be used only as a residential property either by you or your family, and the total time taken for constructing should be within 3 years. The total exemption allowed will be a maximum of Rs 2 lakh. In case it is for the first time you have bought a housing property, your home loan interest can gain you an extra exemption of Rs 50,000 as per Section 80EE. Thus, on the whole, it will be possible to obtain Rs 2.5 lakh deduction for the housing loan interest.
With all the above considerations, the total tax liability in case of income of Rs 9.5 lakh will be as follows
While the total liability is Rs 1.15,000, the total liability will come down to Rs 19,000 with the different tax exemptions.
If you furthermore want to bring down the tax liability and nullify it, you may choose to make donations to charitable institutions that are qualified for tax exemption under Section 80G. The tax liability can even be nullified. Say, you donate about Rs 1.4 lakh, the t total taxable income will come down to Rs 3 lakh and total liable tax amount will be Rs 2500. For incomes up to Rs 3 lakh, you can claim for tax rebate of Rs 2500, hence your tax liability will get zero.
Thus, on the whole, you can even bring down to your total tax liability to zero in spite of making income of up to Rs 10 lakh.
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