Tuesday, February 27, 2024

No tax to be paid on salary of Rs 12 lakh, this formula will save a lot of money

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Salary of Rs 12 lakh will be tax free, this formula will save a lot of moneyImage Credit source: Freepik

The new financial year will start from April 1. Before this, on February 1, Finance Minister Nirmala Sitharaman will present the country’s budget. Amidst all this, the thing that is most useful to you is how to save tax. If you are a salaried class then you must have received an email from the HR department of your company. In which there will be mention of giving investment proof related to income tax for the financial year 2023-24.

In such a situation, everyone would be busy collecting rent receipts, getting information about insurance policy and National Pension Scheme. So that they can save huge taxes. Everyone has the same desire to save as much money as possible in income tax. In such a situation, today we will tell you how you can pay zero tax on your salary of Rs 12 lakh.

This way tax will be saved on salary of Rs 12 lakh

If your salary is Rs 12 lakh per year, then you can avoid paying income tax by following these steps. Meaning your income tax may become nil. So let’s go straight to multiplication.

First of all, you have to ask your HR department to arrange the salary in a tax-friendly manner. On this basis, you can bring your salary up to Rs 12 lakh to zero tax. Apart from this, investment will have to be made so that your tax can be minimum or zero. Investment will mainly include things like Housing Rent Allowance (HRA), Leave Travel Allowance (LTA), Health Insurance, Life Insurance.

salary structure calculation

If your salary is Rs 12 lakh, then you should structure your salary in such a way that HRA is Rs 3.60 lakh, LTA is Rs 10,000 and telephone bill is Rs 6,000. You will get deduction on gross salary like this…

  • Standard deduction under section 16 Rs 50,000
  • Exemption from professional tax Rs 2,500
  • HRA under section 10 (13A) Rs 3.60 lakh
  • LTA under section 10(5) Rs 10,000
  • If you add all the above items, now your taxable salary will remain Rs 7 lakh 71 thousand 500 (7,71,500).

Understand calculations like this

  • Under Section 80C (LIC, PF, PPF, children’s tuition fees) Rs 1.50 lakh
  • Rs 50,000 on National Pension Scheme (NPS) under Tier-1 under Section 80CCD
  • Health insurance for self, wife and children under 80D Rs 25,000
  • Rs 50,000 discount on health policy for parents (senior citizens)

Complete calculation of the formula

If all deductions and exemptions are added, your taxable income will be only Rs 4,96,500. If after this your taxable income remains less than Rs 5 lakh, then the taxpayer does not have to pay any tax on it. This is the formula by following which you can have absolutely zero tax on your income of Rs 12 lakh.

What to do if HR does not agree?

If the HR of your company is not ready to make the salary structure tax friendly, then there is another option for you. Everything will be understood with this simple calculation.

  1. Rebate on home loan of Rs 2 lakh.
  2. Exemption of Rs 1.5 lakh under 80C.
  3. Rs 50,000 discount on NPS Tier 1 account.
  4. Standard deduction Rs 50,000.
  5. Insurance for wife, children and self Rs 25,000.
  6. Insurance of parents or senior citizen Rs 50,000.
  7. Rs 10,000 discount on savings account.
  8. Now if your company gives HRA of only Rs 1.70 lakh, then the total income will come below Rs 5 lakh and your tax liability will become zero.

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