Income Tax Calculation: You can invest the tax saving money for the future of your family or child. From mutual funds to FDs, all investment options are available in the market today.
Nirmala Sitaraman: December has started, the new financial year 2022-23 (FY 2022-23) will start from 1 April. On February 1, the budget for the new financial year will be presented in the Parliament on behalf of the Finance Minister. But among all this, the thing that has worked for you the most is that if you are employed, then your company must have started asking for actual investment proof from you, on the basis of which your tax will be deducted. If you haven’t asked yet, you will ask in a few days. But for tax saving you need to prepare well in advance.
You must let your employer know about the investments you have made since April 1 up to this point. Your Form-16 will be created based on this. Please allow us to assist you with your tax planning. You must pay taxes as a responsible citizen of the nation. However, it is advantageous for you to minimise your tax liability.
Here is how you can save tax
You can invest the tax saving money for the future of your family or child. From mutual funds to FDs, all investment options are available in the market today. Today we talk about your salary and tax. Even if your salary is Rs 12 lakh, you do not need to pay Rs 1 tax.
Planning effectively is crucial to reduce taxes. You could also speak with a specialist about this. If the employer where you worked deducted money from your pay, you can recover the money by filing an ITR in June or July based on this estimate. Let’s quickly review the entire calculation.
If your salary is 12 lakhs, then you come under 30 percent tax. Actually, there is a liability of 30 percent on the annual income of more than Rs 10 lakh.
This is the whole math
1. Every company gives salary to its employees in two parts. In a company it is called Part-A and Part-B. Somewhere it is called Part-1 and Part-2. Tax has to be paid on Part-A or Part-1 salary. Usually, on a salary of 12 lakhs, two lakh rupees are kept in Part-B or Part-2. In this way your taxable income has come down to Rs 10 lakh.
2. Next, subtract the standard deduction of Rs. 50,000 provided by the Ministry of Finance. Your taxable income drops to Rs 9.50 lakh after these deductions.
3. You may deduct up to Rs 1.5 lakh in savings under Section 80C of the Income Tax. You can include things like tuition fees, home loan principal, LIC (LIC), PPF (PPF), mutual funds (ELSS), and EPF (EPF) in this. Your current taxable income is Rs. 8 lakh.
4. Under section 24B of income tax, you get a deduction of two lakh rupees on home loan interest. In this way, your taxable income has come down to Rs.6 lakh here.
5. After this you will have to invest 50 thousand rupees in National Pension System (NPS) under 80CCD (1B) to make the taxable income zero (0). Here the taxable salary has come down to Rs 5.5 lakh per annum.
6. Under Section 80D of Income Tax, you can claim premium for health insurance for children, wife and parents. A premium of up to Rs 25,000 can be claimed for the child and wife. If your parents are senior citizens, you can claim Rs 50,000 as premium. After deducting these two, your taxable income comes down to Rs 4.75 lakh.
Let us tell you that on the income of Rs 2.5 lakh to Rs 4.75 lakh, a tax of Rs 11250 is made at the rate of 5 percent. But there is a tax exemption of up to Rs 12,500 from the Ministry of Finance. In this way your tax liability becomes zero.