TAX PLANNING FOR UPTO 30 LACS SALARY ZERO TAX
Being an Indian taxpayer, you always understand that you need to pay 20-25% of taxes from your income but we need to know that for salaried employees also some expenses allowed for deduction and exemption and allowances. It will help you figure out how tax saving for salaried class works and avoid complications that may arise during tax planning. If you find the appropriate financial instruments, you can reduce the payable income tax for salaried employees. For the very first time in India , you will came to know that if you plan your expenses in such a way that you make expenses on tax free structures, you can plan to zero tax for even salary upto 30 lacs.
Leave Travel Concession (LTC)
Leave Travel Concession is an exemption that salaried employees receive from their employer to travel on leave. Some of them are:
You should also know that LTC cannot be treated as a tax-free income every year u/s 10(5) of the Income Tax Act. It is only allowed twice in block of 4 years.
Health Insurance Premium
Health insurance plan provides financial security to you and your loved ones in medical emergencies or planned hospitalisation. Besides safeguarding your financial interests, health insurance is one of the most used tax saving options for salaried people.
In general, the premiums paid towards health insurance are eligible for income tax deductions for salaried employees, subject to the term of Section 80D. As a part of planning income tax for salaried employees, you can benefit more from this provision by paying for health insurance of your spouse, dependent children, and parents.
The maximum deduction you can avail u/s 80D is Rs. 1,00,000
Allowances Exempt under Section 10(14)(I)
Deduction under Section 80C
This was in the place of the transport allowance (Rs. 19,200) and medical reimbursement (Rs. 15,000).
The limit of Rs. 40,000 has been increased to Rs. 50,000 in the Interim Budget 2019
Tax Rebate under Section 87A
Those having taxable income of up to Rs 5 lakh will not have to pay tax from FY 2019-20.
if you are earning anything above the exemption limits annually then you are mandatorily required to file your ITR.
House Rent Allowance (HRA)
Individuals living in rented accommodation can avail tax benefits for salaried employees as per the related rules. HRA or House Rent Allowance (HRA), a part of an employee’s salary structure, is not fully taxable, leading to income tax deductions for salaried employees.
The amount of exemption is least of the following.
|a) Actual HRA Received|
|b) 40% of Salary (50%, if house situated in Mumbai, Calcutta, Delhi or Madras)|
|c) Rent paid minus 10% of salary|
|(Salary= Basic + DA (if part of retirement benefit) + Turnover based Commission)|
What makes HRA one of the tax saving options for salaried individuals is that a part of it is exempted u/s 10(13A) of the Income Tax Act, 1961, subject to certain clauses. The taxable income is calculated after deducting HRA from the total income.
National Pension Scheme (NPS)
National Pension Scheme (NPS) is one of the long-term tax saving options for salaried people in India. It is an investment plan that falls under the purview of PFRDA and the Central Government. People who want to plan for early retirement and have low-risk appetite invest in NPS. Besides, it also serves as a means for income tax deductions for salaried employees.
Tax benefits for salaried employees can be claimed under Section 80 CCD (1B) for Rs 50000 over and above Rs. 1.5 Lakh ceiling u/s 80CCE. In other words, it helps in income tax planning for salaried employees.
An employee can claim reimbursement of the actual bill amount paid or amount provided in the salary package, whichever is lower
Books and Periodicals
Employees incur expenses on books, newspapers, periodicals, journals and so on. The income tax law allows an employee to claim a tax free reimbursement of the expenses incurred.
Deduction under Section 80E
TDS on Salary under Section 192
Income shall be deemed to under-reported because of misrepresentation of acts in the following cases:
a) misrepresentation or suppression of facts, [As amended by Finance Act, 2022]
b) failure to record investment in the books of accounts,
c) claim of expenditure not substantiated by any evidence,
d) recording of any false entry in the books of account,
e) failure to record any receipt in the books of account having a bearing on total income
Income from House Property
1. Standard Deduction u/s 24@30% of Annual Value
2. Interest paid on home loan( Max Rs. 200,000/-) ,In case of self occupied residential house property
3. Actual interest incurred in case of let out property.
4. Loan Principle payment u/s 80C
5. Deduction for fist time home buyer u/s 80EE
Loss of House property can be adjusted against Salary Income. So in case of one let out and one self occupied house property, you can claim loss of 200000.
Tax Planning for 30 lacs salary Zero tax
|Less Mobile Reimbursement||-30000|
|Less : Books/Magazine/Journals||-60000|
|Less: Petrol Reimbursement||-90000|
|Less: Driver Salary Allowance 10(14)(1)||-180000|
|Less: Uniform Allowance 10(14)(1)||-60000|
|Less: Academic Development 10(14)(1)||-390000|
|Less: Daily Allowance work from home 10(14)(1)||-120000|
|Less Standard Deduction||-50000|
|Less Deduction under Section 80C||-150000|
|Less Deduction under NPS section 80CCD||-50000|
|Less Deduction under section 80D||-75000|
|Less Deduction under Section 80E||-80000|
|Less Loss from house property||-200000|
|Rebate Under section 87A||Zero Tax|
Disclaimer: This is best possible scenario and might not be applicable to you 100%. This article is for information purpose only and not to solicit customers. As Author of this article is working on tax planning solutions but it is strongly recommended to take expert advice before taking any actions.