New Tax Regime: ZERO tax will be levied on salary of ₹ 18 lakh, know how here

Income Tax Savings: Many taxpayers believe that the new tax system is tax-exempt only on income up to ₹ 12 lakh. Income above that will be taxed. But, this is not so. If you plan wisely, then even an income of ₹ 18 lakh can be taxed at ZERO. That too through completely legal deductions and set-offs. We will tell you how you can save maximum tax even while living in the new tax regime. Especially with the benefit of home loan interest, there is double benefit in this.

Total salary ₹ 18,00,000 Tax calculation

Suppose your annual gross salary is ₹18,00,000. New Tax Regime (Default) has been kept. You have let out your purchased house (Let-Out Property). Annual interest on home loan is ₹4,00,000. Other valid deductions have also been added.

Standard Deduction

In the New Tax Regime, you now get a Standard Deduction of up to ₹75,000. This reduces your income to ₹17.25 lakh. That means ₹18,00,000 – ₹75,000 = ₹17,25,000.

Home loan interest set-off

If you have rented out your house, interest up to ₹2 lakh can be deducted in tax. Home loan interest can be set-off in the new tax regime. The government has set its limit to ₹2 lakh. That means ₹17,25,000 – ₹2,00,000 = ₹15,25,000.

NPS – Employer Contribution

If your company contributes up to 12% to NPS, then it is considered completely tax free. Suppose the company contributes ₹2,16,000 (12% of ₹18L) annually to NPS, then ₹15,25,000 – ₹2,16,000 = ₹13,09,000.

Allowances (like HRA, LTA, Travel etc.)

If there are some valid allowances in your salary like HRA or LTA, then they are also tax exempt. Suppose there are such allowances up to ₹1,50,000, then ₹13,09,000 – ₹1,50,000 = ₹11,59,000.

Family Pension Deduction or GIFT Exemption

There is a tax exemption of up to ₹50K in Family Pension Deduction or GIFT. If you have received a gift up to ₹50,000, that too is Tax free. Meaning Final Taxable Income will be ₹11,09,000.

Final Taxable Income

According to the new rules, tax exemption of ₹25,000 is available on taxable income up to ₹12 lakh. According to the slab, the tax is ₹25,000 and after rebate, Net Tax = ₹0. Your entire salary of ₹18 lakhs has become tax free.

More tax will be saved in the New Regime!

By using home loan interest, NPS, allowances and rebate correctly, the entire tax on taxable income up to ₹18 lakhs can be waived off. New Tax Regime = Smart Planning = ZERO TAX

Understand the rules of home loan interest

If you have rented out the house bought with a home loan, and the company also gives NPS or some valid allowance, then tax on salary up to ₹18 lakhs can also be made zero. This benefit will be available in the New Tax Regime. The only condition is that you use all these exemptions with planning and keep in mind the tax rules.

The post New Tax Regime: ZERO tax will be levied on salary of ₹ 18 lakh, know how here first appeared on informalnewz.

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