Taxpayers often look for options to help them save on income tax. Under the old tax regime, a tax of Rs 10 lakh was levied at a tax rate of 15% which could be reduced to zero, according to experts.
There are many deductions introduced by the government that can be taken to save tax: While exemptions are part of salary, such as Housing Allowance (HRA) and Travel Allowance (LTA), most of the deductions are section 80C which allow some expenses and the investment becomes taxable, through this, one can reduce the taxable amount by Rs.1.5o lakhs.
Apart from this, there are many other categories available for deducting deductions ranging from interest on loans (housing and education) to health insurance premiums.
How to pay zero tax on a salary of Rs 10 lakh?
According to tax expert Gauri Chadha, if a person earns Rs 10 lakhs per year, then under the Old Tax Regime, he may end up paying zero income tax.
According to Archit Gupta, founder and CEO of Clear, it is theoretically possible to pay zero tax on an income of Rs 10 lakhs. Even if the salary is Rs 12 lakhs, the tax payable can be reduced to zero.
However, he warned that those with an annual income of up to Rs 10 lakhs may find it difficult to generate cash flows to fund all investment strategies.
Putting things in perspective, Archit Gupta gave the following example:
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