December has already begun, and the new fiscal year 2022–23 (FY 2022-23) will begin on April 1. The Finance Minister will deliver the budget for the upcoming fiscal year to Parliament on February 1.
But out of all of this, the thing that has helped you the most is that, if you are working, your company must have started asking for actual investment proof from you to deduct your tax. But to save on taxes, you must plan ahead of time.
Based on this, Form-16 will be created, and you will be required to inform your employer of the investments you have made from April 1 through the present. Your Form-16 will be formed based on this. Let us help you with your tax-saving planning. You must pay taxes as a responsible citizen of the country. However, it is profitable for you to minimize your tax liability.
How can you save tax? Understand here.
The money you save on taxes might be used to invest for your family's or child's future. All investing alternatives, from mutual funds to FDs, are accessible nowadays. Today's topic is taxes and your pay. You are excused from paying taxes even though your annual salary is Rs. 12 lakh.
You must make an effective plan to reduce your tax liability. You could also take the help of a specialist about this. Based on this computation, you can recover any money withheld from your salary in the company where you previously worked by filing an ITR in June or July. Let's quickly review the entire calculation.
If your salary is beyond Rs. 12 lakh, you must pay 30% in taxes. In addition, there is a 30 percent responsibility for annual income over Rs 10 lakh.
Below is the complete math
- Every business splits up its employees' salaries into two halves. Somewhere it is referred to as Part-A and Part-B or as Parts 1 and 2. Typically, two lakh rupees are maintained in Part-B or Part-2 of a paycheck of 12 lakhs. Your taxable income has decreased to Rs. 10 lakh as a result.
- After that, subtract the standard deduction of Rs 50,000 provided by the Ministry of Finance. Your taxable income decreases to Rs 9.50 lakh after these deductions.
- You can subtract up to Rs 1.5 lakh in savings under Section 80C of the Income Tax. You can include things like college fees, home loan principal, PPF (PPF), mutual funds (ELSS), LIC (LIC), and EPF (EPF) in this. Your current taxable income is Rs. 8 lakh.
- You are entitled to a two lakh rupee deduction for home loan interest under section 24B of the income tax code. Your taxable income has decreased to Rs. 6 lakh as a result.
- After that, to make your taxable income zero, you must invest 50,000 rupees in the National Pension System (NPS) under section 80CCD (1B) (0). The taxable pay, in this case, has decreased to Rs 5.5 lakh annually.
- You can eliminate the cost of health insurance premiums for your wife, parents, and kids under Income Tax Section 80D. The wife and child are eligible to receive a premium of up to Rs 25,000. Your elderly parents are eligible to receive a premium of Rs. 50,000. Your taxable income drops to Rs. 4.75 lakh after these two deductions.
Let us inform you that a tax of Rs. 11250 is levied at a rate of 5% on income between Rs. 2.5 lakh and Rs. 4.75 lakh. But the Ministry of Finance does offer a tax exemption of up to Rs 12,500. So your tax liability becomes zero in this manner.