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Income Tax Refund: The election season is over. The picture of who will form the government is almost clear. The election trends are in favor of NDA and it has won 292 seats. But in the meantime, you will also have to take care of Income Tax Return. Like last year, this time also the last date for filing ITR is 31st July. If you do not file ITR on time, then you may have to pay a penalty. But before filing ITR, you should know how you can save maximum income tax?
No tax on income up to Rs 2.50 lakh
Under the old system of income tax, there is no tax on income up to Rs 2 lakh 50 thousand. But here we will tell you how you can avoid income tax liability on income up to Rs 10 lakh. That is, you will not have to pay a single rupee tax on income up to Rs 10 lakh. Let's know how?
Things to keep in mind to reduce income tax liability-
1. If your annual income is also Rs 10.50 lakh, then how can you avoid paying income tax. Here we will tell you the complete math of this. First of all, you will get a rebate of Rs 50 thousand on this income under standard deduction. This reduces your taxable income of Rs 10.50 lakh to Rs 10 lakh.
2. Now out of the income of Rs 10 lakh, you can claim savings up to Rs 1.50 lakh under Section 80C of the Income Tax Act. Under Section 80C, you can claim on investments made in LIC, PPF, Sukanya Samriddhi children's tuition fees, mutual funds (ELSS) and EPF. Under this, you can also claim on the principal amount of home loan. In this way, your taxable income remains Rs 8 lakh 50 thousand.
3. After this, you can claim Rs 2 lakh under section 24B of the Income Tax Act. You get this exemption on the interest amount of the home loan. After claiming these two lakh rupees, your taxable income remains Rs 6.50 lakh.
4. After this, you can claim medical health insurance up to Rs 25000 under section 80D for tax saving. If your parents are senior citizens, then you can claim Rs 50000 for their health insurance. In this way, if you claim a premium of Rs 75000, then your taxable income comes down to Rs 5.75 lakh.
5. Now you can invest Rs 50,000 in the National Pension System (NPS) to reduce your tax liability. You can claim it under 80CCD (1B). That means now your taxable income has come down to Rs 5.25 lakh. You can reduce it even further.
6. After this, if you donate Rs 25,000 to any institution or trust, then you will get benefit under section 80G of Income Tax and your taxable income will be reduced to Rs 5 lakh.
7. On income between Rs 2.50 lakh and Rs 5 lakh, tax of Rs 12,500 is levied at the rate of 5%. But the government gives you a rebate on this. In this way, your tax becomes zero rupees.
Let us tell you that under the old tax system, there is a provision of 5 percent tax on income from Rs 2.5 lakh to Rs 5 lakh. After this, there is a provision of 20 percent tax on annual income of Rs 5 to 10 lakh. Apart from this, there is a 30 percent tax liability on annual income of Rs 10 lakh and above.