How 10 lakh income wallahs dont have to pay tax

Here is how a person can cut down the tax outgo to zero for income up to Rs 10 lakh.

1) Basic income of Rs 2.5 lakh per annum is exempted from income tax.

2) You can claim deduction of Rs 1.5 lakh under Section 80C. There are various investments such as public provident fund (PPF), tax-saving equity mutual funds and tax-saving fixed deposits that qualify for deduction under this section. You can also claim payment made against the principal of home loan as deduction under this section.

3) Also, if you have a home loan, you can claim a deduction of up to Rs 2 lakh against the home loan interest payment. Or if your company gives you house rent allowance (HRA), you can claim a deduction against it. You can claim the minimum of the three for HRA:

a) The HRA paid by your employer

b) Actual rent paid by you minus 10 per cent of basic salary

c) 50 per cent of salary, if living in a metro or 40 per cent of the salary, in case of non-metro

You can claim both HRA and deduction against home loan if you are residing on rent in another city due to employment reasons.

4) You can claim an additional deduction of Rs 50,000 for investments made in National Pension Scheme (NPS) under Section 80CCD. Section 80CCD represents deduction with respect to a pension plan notified by the government, including NPS.

5) Apart from this, employer's contribution to NPS of up to 10 per cent of basic salary is tax exempt under Section 80CCD(2).

6) You can claim a deduction of Rs 25,000 per annum against medical insurance premium paid. Apart from this, you can claim an additional Rs 30,000 for the medical insurance premium paid for your parents.

7) You can avail a deduction of Rs 25,000 for investments made up to Rs 50,000 in Rajiv Gandhi Equity Saving Scheme (RGESS). New investors with income below Rs 12 lakh can invest in this scheme.

8) If your salary has allowance components, there are certain allowances against which you can claim tax deductions. You can avail a deduction of up to Rs 15,000 as medical allowance. Food coupons of up to Rs 2,200 per month are also tax-exempt. There are certain allowances such as periodicals and uniform which can be claimed as per actuals.

9) Gifts of Rs 5,000 per annum from employer are tax-exempt.

10) You are also allowed to claim a transport allowance of Rs 1,600 per month which is equal to Rs 19,200 a year.

11) You can claim a children's education allowance of up to Rs 100 per month per child. Also, you can claim up to Rs 300 per month against hostel fees for each of your children.

12) If you taxable income is below Rs 5 lakh, you are entailed to a tax rebate of Rs 5,000 on your total tax. more  

View all 17 comments Below 17 comments
yes infrastructure bonds are discontinued and i got my money back. For tax information please refer to Tax Or you just pay rs.500 there are so many people in this world come to your house and do the needful On Fri, Jul 29, 2016 at 2:28 PM, Karan Kapoor wrote: > more  
on income tax issue on can see taxguru site. you will get all information more  
i think infrastructure bonds investment of Rs.20,000/- is discontinued more  
Thanks for relevant information , under section 80 D , which types of saving is taken as a parts from ppf, fd , do we consider nsc/mis(po)/term deposit po/banks also.kindly describe saving instruments in details. more  
Useful information for employees. more  
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