Income tax benefits are the most important topic in any Budget. This is because any change in existing tax rules can provide an opportunity to save income tax in the next Financial Year.
As this was an interim budget, no changes were implemented in the tax slabs. However, some investment decisions may be helpful to maximize the tax benefits offered by this budget.
Below are the key highlights related to income tax
- No change in existing income tax slabs.
- No income tax, for gross taxable salary up-to Rs 5,00,000.
- Standard deduction increased from Rs. 40,000 to Rs. 50,000.
- No TDS on income from interest(FD/RD/Savings account) up-to Rs. 40,000.
As a result of the above proposals, one one save paying any income tax on a gross yearly salary of Rs. 13,00,000 by investing in commonly available tax saving instruments.
Calculations:
Please refer to the below table for details about how to maximize income tax savings.
| Gross Salary | Rs. 13,00,000 | |
| Basic Salary (assumption) | Rs 6,00,000 | |
| Std. deduction | Rs. 50,000 | |
| Deduction u/s 80C – PPF, ELSS, EPF | Rs. 1,50,000 | |
| Deduction u/s 80D – medical insurance | Rs. 50,000 | |
| Deduction u/s 80CCD(1B) – NPS self | Rs. 50,000 | |
| Deduction u/s 24B – home loan interest | Rs. 2,00,000 | |
| Deduction u/s 80 CCD(2) – NPS employer | Rs. 60,000 | |
| HRA deduction(rented home in a metro city) | Rs. 2,40,000 | |
| Total deductions | Rs. 8,00,000 | |
| Taxable Salary (Gross – deductions) | Rs. 5,00,000 | |
| Income Tax (5% on 2.5L) | Rs. 12,500 | |
| Income Tax Rebate (as per interim budget) | Rs. -12,500 | |
| Net income tax | NIL |
Above data is just for reference purpose. Majority of people would not be investing in all of the tax-saving options.
What are your thoughts on the interim budget? Please share your questions or feedback in the comments section.
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