How to pay zero tax on Rs 19.2 lakh income under new tax regime? See calculations
National Pension Scheme Benefits in New Tax Regime: If you opt for NPS, then you can invest 14 per cent of your basic salary under the new tax regime, as per the government rules. The limit is 10 per cent of basic salary under the old tax regime.
New tax regime: The old and new tax regimes have various tax slabs and rates. Under the old tax regime, a few exemptions and deductions were permitted. While the new tax regime provides lower rates of tax, but has limited deductions and exemptions. Choosing a tax regime varies from person to person. It depends on their salary, investments, and other things. It is better to calculate your tax under both regimes before choosing one. Exemptions like House Rent Allowance (HRA) are allowed only in the old tax regime. In the new tax regime, you can opt for the National Pension Scheme (NPS) to save tax.
Images from Pexels
Is it mandatory for employees to intimate tax regime to the employer?
Yes, employees need to inform tax regime to the employer. If they don't do that, the default tax regime will be considered for the year.
Is there any special advantage for senior citizens?
No, unlike the old tax regime, there is no special advantage for senior citizens.
New tax regime
Under the new regime, there will be no tax obligation on income up to Rs 12 lakh.
How to pay 0 tax on Rs 19,20,000 salary?
Yes, under certain conditions, if your annual income is Rs 19,20,000, then you also don't need to pay any tax. Let's understand this possibility in detail.
Salary breakup
Basic Pay: Rs 6,00,000
Personal Allowance: Rs 5,50,000
PF: Rs 21,600 (minimum opted)
Gratuity: Rs 28,800
Variable Pay: Rs 96,000
Flexi pay tax-free components: Rs 6,23,600
Total CTC: Rs 19,20,000
Standard deduction
Under the new tax regime, the standard deduction is Rs 75,000.
Rs 19,20,000- Rs 75,000= Rs 18,45,000
NPS
If you opt for NPS, then you can invest 14 per cent of your basic salary under the new tax regime, as per the government rules. The limit is 10 per cent of basic salary under the old tax regime.
Rs 18,45,000 – Rs 84,000 = Rs 17,61,000
Flexi Pay tax-free component
Conveyance: Rs 2,85,600
Books & Periodicals: Rs 1,08,000
Entertainment: Rs 1,40,000
Uniform: Rs 90,000
Total: Rs 6,23,600
Rs 17,61,000 – Rs 6,23,600 = Rs 11,37,400
Home Loan Interest + Rental Income Set-off
The limit for this is Rs 2,60,000 if the house is let out.
Interest Deduction: Rs 2,00,000
Rental Income Adjustment: Rs 60,000
Rs 11,37,400 – Rs 2,60,000 = Rs 8,77,400
Other deductions
Gift, family pension, and others: Rs 50,000
Rs 8,77,400 – Rs 50,000 = Rs 8,27,400 (Final Taxable Income)
Final taxable income
According to the new rules, a tax rebate of Rs 25,000 is available on taxable income up to Rs 12 lakh. According to the slab, the tax is Rs 25,000, and after rebate, the net tax = Rs 0. Your entire salary of Rs 19.20 lakh has become tax-free.
Same tax rates for all
All individual categories, including individuals, senior citizens, and super senior citizens, will have to pay the same tax rates under the new tax regime.
Surcharge under the new tax regime
Surcharge: Under the new regime, the highest surcharge rate is 25 per cent, whereas under the previous regime, it was 37 per cent.
New tax regime: Slabs
Rs 0- Rs 4 lakh: Nil
Rs 4 lakh- Rs 8 lakh: 5%
Rs 8 lakh- Rs 12 lakh: 10%
Rs 12 lakh- Rs 16 lakh: 15%
Rs 16 lakh- Rs 20 lakh: 20%
Rs 20 lakh- Rs 24 lakh: 25%
Above Rs 24 lakh: 30%