Can we imagine that if a salaried person is getting Rs. 10,00,000/- p.a. still, he need not to pay tax under the income tax act. The answer is yes after the budget announcement it can happen with smart investment and tax planning.
Let us understand the same with an example
| SR | Particulars | Amt(Rs.) | Amt(Rs.) |
| Income from salary | 10,00,000 | ||
| – | Less: Standard Deduction (Under Section 16(ia)), irrespective of the allowances received by the employees of the company) | (50,000) | |
| – | Net Income from salary | 9,50,000 | |
| – | Less: Interest on housing loan (Max. allowable deduction under section 24(b) is Rs.2,00,000 for self-occupied house property) | (2,00,000) | |
| Gross Total Income | 7,50,000 | ||
| Deduction under chapter VI of the Income tax act | |||
| – | Under section 80C (Max. deduction allowed is Rs. 1,50,000/-)(for investment in ELSS Mutual fund, PPF, LIP, tuition fees of school or recognized university for full-time course, NSC, KVP, a stamp duty of house, principal repayment of housing loan, sukanya samriddhi yojana, etc.) | (1,50,000) | |
| – | Under Section 80CCD (Max. deduction allowed is Rs. 50,000/- for investment in recognized National Pension scheme) | (50,000) | |
| – | Under section 80D (Max. Rs. 25,000/- for self, spouse and children and Rs. 25,000/- for parents). It will be Rs. 30,000/- if self and spouse or parents any of them is a senior citizen) | (50,000) | |
| – | Total Deduction | (2,50,000) | |
| Total Income | 5,00,000 | ||
| Tax on total income | |||
| – | On First upto Rs. 2,50,000/- | Nil | |
| – | On Next upto Rs. 2,50,000/- @ 5% | 12,500 | |
| – | On Next upto Rs. 5,00,000/- @ 20% | N.A. | |
| – | Income Above Rs. 10,00,000/- @ 30% | N.A. | 12,500 |
| – | Less: Rebate under section 87A (Max. upto Rs. 12,500/- for a person having total income upto Rs. 5,00,000/-) | (12,500) | |
| Net Tax Payable | Nil | ||
The government has given various benefits under different heads of income as well as under deduction sections of the income tax act. So, even if any person is earning Rs. 10,00,000/- p.a. he need not to pay any income tax to the government.
However, if the total income of the individual is increased even by Rs. 1/- above Rs. 5,00,000/- then benefit of section 87A is not available to individual then in that case the tax amount will be increased by Rs. 12,500/- as the benefit under section 87A is not available to the individual. Moreover, the above-mentioned benefits are available to only Individual and HUF. Partnership firm or company will not be getting such benefits of slab rate or rebate or deduction under chapter VI as mentioned above.
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