As we advance in our careers, we also become afraid of paying taxes, and we want to know how we might reduce our tax liability. A similar thing happened with my brother and he asked me how to pay zero tax on salary of 18 lakhs. I told him some tips include claiming House Rent Allowance (HRA), utilising the National Pension System (NPS), and so on. I have shared all the tips below for you.
How to Save Tax on an Annual Income of Rs.18 Lakh in India?
Here are some tips I am aware of and informed to my brother.
Standard Deduction: Deduct Rs.50,000 from your salary automatically.
Section 80C (Rs.1.5 Lakhs): Invest in tax-saving instruments like Public Provident Fund (PPF), Equity-Linked Savings Schemes (ELSS), Employees Provident Fund (EPF), or pay life insurance premiums.
Section 80CCD (1B): Claim an additional Rs.50,000 deduction by contributing to the National Pension System.
Section 80D (Rs.75,000): Deduct Rs.25,000 for health insurance premiums for self and family, and Rs.50,000 for parents aged 60 or above.
Home Loan Benefits: Deduct Rs.2 lakhs on home loan interest under Section 24(b) and claim principal repayment under Section 80C.
HRA Exemption: If you live in a rented house, claim House Rent Allowance (HRA) as per income tax rules.
Tax-Free Allowances: Use exemptions like Leave Travel Allowance (LTA) and reimbursement of telephone or internet bills.
Voluntary NPS Contribution: Employers can contribute up to 10% of your basic salary under Section 80CCD(2), which is tax exempt and doesn\'t count towards Section 80C limits.
Rebate under Section 87A: For taxable income, up to Rs.7 lakhs (after deductions), you can claim a Rs.25,000 rebate under the new regime.
I hope you found this helpful.
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How to Pay Zero Tax on Salary of 18 Lakhs?
ruchi
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1 Answers
1 days
2025-01-23T09:46:32+00:00 2025-01-23T09:46:33+00:00Comment
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