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New Tax System: In the financial year 2020-21, the government started a new tax system. Since then, some changes have been made in every budget. The government has made some changes in this budget as well. In this budget, 2 major changes were made in the new tax system. First, the standard deduction has been increased from Rs 50,000 to Rs 75,000. The second change is that the employee's contribution under Corporate NPS has been increased from 10 percent to 14 percent. Due to these changes in the new tax system, now you can get tax exemption on salary up to Rs 8.30 lakh. Let's understand its calculation.
First know about the exemptions available under the tax slab
In last year's budget, the government has made some changes to make the new tax system more attractive than the old tax system. Under this, you will not have to pay any tax up to Rs 3 lakh. On the other hand, if your taxable income is up to Rs 7 lakh, then you will get tax exemption on Rs 3-7 lakh i.e. the remaining Rs 4 lakh. Along with this, the government has also given the benefit of two types of deductions to make it more attractive.
1- Standard deduction
In the old tax system, salaried people still get a standard deduction of Rs 50,000. However, now it has been increased to Rs 75,000. That is, no matter how much your salary is, you will not have to pay any tax on Rs 75,000. In this way, you will not have to pay tax on salary up to Rs 7.75 lakh, not Rs 7 lakh.
2- Corporate National Pension System
By contributing to NPS through the employer, you can get some additional exemptions in addition to the standard deduction. Apart from the exemption of Rs 1.5 lakh under 80CCD(1) and Rs 50,000 under 80CCD(1B), there is an additional exemption under 80CCD(2). Under this, you will get exemption on investments made by your employer in NPS. Employees of private companies can now invest up to 14% of their basic salary in NPS. This figure was already 14% for government employees.
How will ₹8.30 lakh become tax free?
Suppose your package is Rs 8.30 lakh. In such a situation, your basic salary will be at least 50% (₹4.15 lakh) of your CTC. In such a situation, you can invest up to 14% of it i.e. Rs 58,100 in a corporate NPS account. You will get a standard deduction of Rs 75,000 on Rs 8.30 lakh and a tax exemption of Rs 58,100 on corporate NPS. In this way, you will get a total deduction of up to Rs 1,33,100, due to which your taxable income will be less than Rs 7 lakh (Rs 6,96,900) and your tax liability will be zero.
What needs to be done to get this discount?
Most companies provide NPS facility. You can invest in NPS by talking to the HR of your company. This investment is made from your basic salary and the result will be that your in-hand salary will be reduced every month. The good thing will be that you will be able to get additional tax exemption. If your company does not have NPS facility, then talk to HR once, they will guide you about this.
