Zero Tax for Income upto 12 lacs

Everyone who earns or gets an income in India is subject to income tax governed by The Income Tax Act of 1961 and Income Tax Rules of 1962 . Your income could be salary, pension or could be from a savings account that’s quietly accumulating a 4% interest. Taxes pinch and you must find a way to reduce the tax burden.Tax saved is money saved.The good news is you can still manage to pay Zero (NIL) income tax on salary of up to Rs 12 lakhs. All you need to have is right salary structure and invest in RIGHT Tax saving plans!

 

The tax laws in India allow you certain tax benefit, as your package increases, avenues to save tax increases as well. These benefits are available subject to certain conditions.

 By employing effective tax planning strategies. Further, there are several tax saving instruments which can effectively guide to Save TAX.

 Let's first discuss about income tax slab rate applicable on individuals for assessment year 2019-20 :-

 

Income Tax Rate AY 2019-20 | FY 2018-19 – Individuals less than 60 years

General / NRI

Senior Citizen

Super Senior Citizen

Tax Rate

Upto 2.5 lacs

Upto 3 lacs

Upto 5 lacs

Nil

2.5 to 5 lacs

3 to 5 lacs

_

5%

5 TO 10 lacs

5 TO 10 lacs

5 TO 10 lacs

20%

Above 10

Above 10

Above 10

30%

 No tax is chargeable on income of an individual upto such basic exemption limit.

Under Sec-87A there is a maximum rebate of Rs 2,500  Subject to Taxable Income Upto Rs 3,50,000.

You Have Following Option for Saving Tax:-

Salary Components

Exemption

 Remarks

House Rent Allowance

The deduction available is the least of the following amounts:

a. Actual HRA received;

b. 50% of [basic salary + DA] for those living in metro cities (40% for non-metros); or

c. Actual rent paid less 10% of basic salary + DA

 Partially Tax Exempted

Car Maintenance

Maximum 2,400 per month

Tax Free if bills submitted

Meal Coupons

2,200 per month

Tax Free up to Rs 50/meal (22 working days)

NPS (Employer Contribution)

10% of basic salary

Tax Free up to 10% of basic salary

EPF (Employer Contribution)

12% of basic salary

Tax Free up to 12% of basic salary

Phone & Internet Bill Reimbursement

3,000 per month

Tax Free if bills submitted

Uniform Allowance

2,000 per month

Tax Free if bills submitted

Children Education/Hostel Allowance

400 per month

Tax Free if bills submitted

Newspaper/Journal Allowance

1,000 per month

Tax Free if bills submitted

Gift voucher

5,000

Tax Free up to Rs 5,000

LTA (Leave Travel Allowance)

30,000

Tax Free if bills submitted

Also salaried individual can claim standard deduction of Rs. 40,000/-( No Transport Allowance and Medical Reimbursement are no more allowed)    Following are the Deductions:-

1. Deductions under Section 80C

Investments under following financial instruments are eligible for tax deductions under Section 80C, up to a maximum of Rs 1.5 Lakhs a year :

* Premium paid for life insurance plans

* PPF

* EMI (Principle) on home loans

* Tution fees

* Mutual funds

2. Deductions under Section 80CCD(1B)

Under this section if you have contributed to National Pension Scheme an additional benefit of Rs.50,000 can be claimed. 

3. Deductions under Section 80CCD(2)

 This Deduction is available on the contribution paid by employer .

4. Deductions under Section 80D

Thetaxdeductionunderthissectionisallowedonthepremiumpaidonmedicalinsurance.

Deduction limit:

For Self (Below 60 years )

Rs.25,000 per year

For Self ( 60 years or above )

Rs.50,000 per year

For parents (Below 60 years )

Rs. 25,000 per year

For parents ( 60 years or above ) 

Rs.50,000 per year

 

5.  Deductions under Section 80E

The amount of interest paid on education loan is eligible for deduction , there is no cap on the amount to be deducted. Deduction can be claimed upto 8 years or repayment of principle amount of loan whichever is earlier.

6.  Deductions under Section 80EE

You can get a tax deduction under Section 24 up to a maximum of Rs 2 Lakhs a year, on the interest paid on a home loan. You get an additional deduction of Rs 50,000 a year under Section 80EE on the interest paid on the home loan if you are a first-time-home buyer.