How can you save tax for salary above 10.50 lakh?

Online ITR FilingBy admin
How can you save tax for salary

At present, the government has given tax concessions on income up to Rs 5 lakhs, and the finance budget 2023 has increased rebate U/s 87A from the financial year 2023–24 due to the impact of income raised to Rs 7 lakhs under the new tax regime. If the income is more than this, it will be considered taxable, and your tax liability will be as per the tax slab in that financial year. But if you want, you can save tax not only on income of Rs 5 lakh or 7 lakhs but also on income above Rs 10.50 lakhs. There are many such schemes, and by investing in them, you get tax benefits. Know here how you can save tax on salary income greater than Rs 10.50 lakh.

Before going to know about how to save tax on a salary above 10 lakhs We need to understand the tax slab.

The Income Tax Rule says that no tax will have to be paid on annual income up to Rs 2.50 lakh. There is a provision for a 5% tax on income of Rs 2.50 to Rs 5 lakhs. 20% tax has to be paid on income of 5 to 10 lakhs and 30% tax on income greater than 10 lakhs under the old tax regime. And in the new tax regime, no tax will have to be paid on annual income up to Rs 7 lakhs (after consideration of rebate U/s 87A). There is a provision for a 20% tax on income of Rs 7 to 10 lakhs. 30% tax on income greater than 10 lakhs

How can you save tax on a salary above Rs. 10.50 lakh? And you continued the old tax regime.

There are many ways to save tax on income of Rs 10.50 lakhs or above.

  • Suppose your income is Rs 10,50,000. First of all, you subtract Rs. 50,000 of the standard deduction from this. The standard deduction is the deduction that is deducted from your salary income, and after that, tax is calculated on the remaining income.

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Important to file an income tax return every year

Employed employees and pensioners get the benefit of a standard deduction of up to Rs 50,000 from the government. After reducing Rs 50,000, your income will come within the range of Rs 10,00,000.

  • Apart from this, the government gives an exemption up to Rs 1.5 lakh under 80C. You can save up to Rs 1.5 lakh by investing in schemes like LIC, EPF, PPF, ELSS, and NSC. By deducting Rs 1.5 lakh from Rs 10,00,000,  your income will be Rs 8,50,000.
  • You must take a medical policy for your family to save up to Rs 25,000. Under Section 80D, a tax exemption of up to Rs 25,000 is available. On the other hand, if your parents are senior citizens, then you can claim a deduction of up to Rs 50,000 by buying a health insurance plan for them. In this way, you can save up to Rs 75,000. If you subtract Rs 75,000 from Rs 8,50,000, your income will be reduced to Rs 7,75,000.
  • You invest your money in property and take a home loan for it. You can avail of a tax exemption on interest up to Rs 2 lakh on a home loan under Section 24B of the Income Tax Act. In such a situation, if you reduce Rs 2,00,000 from Rs 7,75,000, your income will be reduced to Rs 5,75,000.
  • If you want to save Rs. 50,000, then you must invest in NPS. By investing up to Rs 50,000 annually in the National Pension System, you get the option to save tax on income up to Rs 50,000 under Section 80CCD (1B). In such a situation, if you reduce Rs 50,000 from Rs 5,75,000, your income will be reduced to Rs 5,25,000.
  • If you donate money, you can save up to Rs 25,000 under Section 80G of Income Tax through a stamped receipt of the donation. In this way, by subtracting Rs 25,000 from Rs 5,25,000, your income comes within the range of Rs 5 lakh.
  • On an income of Rs 5,00,000, a tax of Rs 12,500 is payable. You get a rebate of Rs 12,500 under Section 87A of the Income Tax Act. In such a situation, you can completely avoid tax liability on income up to Rs 10,50,000/- in the case of a salaried person or on Rs 10,00,000 in other cases by an individual.

Note: Under the new tax regime, rebate U/S 87A is available on tax up to Rs 25000; hence, no tax is payable on income up to Rs 7 lacs for FY 2023–24 (AY 2024–25) after budget 2023. The calculation is as follows:

For income up to 3 lacs: NIL tax,

Further 3 lacs to 6 lacs Tax@5% i.e. Rs.15,000

And on Rs. 6 lacs to 7 lacs, the tax payable is Rs. 10000 + Rs. 15000 (as above).

And less rebate U/s 87A for tax payable up to Rs. 25000 (on income up to Rs. 7 lacs), so here all tax liability will be zero (tax payable Rs. 25000 less rebate U/s 87A Rs. 25000).

Further, please note that there are many deductions not available (out of a few here like HRA, interest on home loan U/s 24 in case self-occupied or vencant, for investments U/s 80C, 80D medical, etc.), but a standard deduction of Rs 50,000 from salary and a deduction of U/s 57 family pension up to Rs 15000, employer contributions U/s 80 CCD (2) in NPS will be available in the new tax regime introduced by Budget 2023.

Conclusion:

These are all important things that can help save tax on salaries above 10.50 lakhs. And if you still have any confusion or want to file your Online ITR Filing, you can feel free to contact KcorpTax.

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