Income Tax Savings: Pay zero income tax if you have Rs 10 lakh salary, check out how

If your annual salary is more than Rs 10 lakh, then you have to pay a large part of your earnings as tax. But by doing good planning, you can avoid paying tax on annual income of 10 lakhs (Tax Saving Tips). By taking advantage of the tax exemption given by the government, you can be free from the tension of tax liability. That is, even after earning so much, you will not have to pay tax even 1 rupee. Let's know how.

Suppose an individual has an annual income of Rs 10 lakh and interest income is Rs 20,000. His annual income of Rs 9.7 lakh would become taxable on account of standard deduction.

Save Rs 2 lakh under Section 80C and 80CCD(1b)
Tax saving investments under section 80C can reduce taxable income up to Rs 1.50 lakh. For this you can invest in EPF, PPF, ELSS, NSC. Apart from this, tuition fees of two children can also be included. One can save an additional Rs 50,000 by investing in the National Pension Scheme under section 80CCD(1b). These two deductions will reduce the taxable income to Rs 7.7 lakh per annum.

Deduction of Rs 2 lakh under HRA
Further, the home loan or house rent allowance (HRA) will reduce the taxable income by up to Rs 2 lakh, after which the effective taxable income will come down to Rs 5.7 lakh.

Rs 75,000 less taxable income from insurance
Health insurance, which has become especially important post-Covid, can reduce taxable income by another Rs 25,000. In addition, taxpayers can claim another Rs 50,000 paid for insurance of elderly parents. After claiming both these deductions, the taxable income will come down to Rs 4.95 lakh.

If the taxable income is less than Rs 5 lakh, it is not taxable as it is eligible for full exemption under section 87A. After using all these deductions, the taxpayer can nil the tax payable on income of Rs 10 lakh in a year.