ITR Filing: Pay Zero Tax On Rs 10 Lakh Yearly Income --Here's The Math

The Union Budget 2024 brought about major changes to the new tax structure, including an increase in the basic deduction from Rs 50,000 to Rs 75,000. If your yearly income is up to ₹7 lakh, you will not be subject to income tax. The good news is that even if your annual income is ₹10 lakhs, you can still reduce your overall tax liability.

Plans with 80C benefits, such as PPF, EPF, and NSC, can help you save taxes. If you have invested in these schemes, you can save up to Rs 1.5 lakh in taxes. Your taxable income will drop to Rs 8.5 lakh after deducting Rs 1.5 lakh from your earnings of Rs 10 lakh.

For income up to Rs 10 lakhs, you will have to go back to the former tax structure to take advantage of income tax benefits. Should you decide to use the former tax structure, you might deduct up to Rs 50,000 as a standard deduction. After taking Rs 50,000 out of Rs 8.5 lakh, your taxable income will be Rs 8 lakh.

Under Section 80D of the Income Tax, you can save up to Rs 25,000 in taxes if you have purchased a medical policy and receive an additional discount of up to Rs 50,000 if your wife, children, and yourself are all listed on the health insurance policy. Now if you deduct Rs 75,000 from Rs 8 lakh, your income will be decreased to Rs 7,25,000.

Tax savings are possible with the National Pension System (NPS). If you invest up to Rs 50,000 in NPS annually, you can receive an additional tax exemption of Rs 50,000 under Section 80CCD (1B). The taxable income will be Rs 6,75,000 if you deduct Rs 50,000 from Rs 7,25,000.

If you are a residential property borrower, you can lower your interest payments by up to Rs 2 lakh under Section 24B of Income Tax. It may enable tax savings. After taking Rs 2 lakh out of Rs 6,75,000, you would now have Rs 4,75,000.

Since there is no tax on income up to Rs 5 lakh under the previous tax regime, you won't be obliged to pay any tax on your current income of Rs 4,75,000. Thus, even if your income is up to Rs 10 lakh, you can still save taxes if you have taken advantage of schemes and policies.