How to Pay Zero Tax on Salary of ₹12 Lakhs?

By Team foundit

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February 19, 2024

Did you know you can legally pay zero tax on your salary up to 12 lakhs in India? It's true! With smart tax planning, you can save money and boost your savings.

1. Utilize Standard Deduction

Take advantage of the increased standard deduction (₹ 50,000) for salaried individuals.

2. Profession Tax Deduction

Deduct the professional tax paid (up to ₹ 2,500) from your taxable income.

3. Section 80C Instruments

Invest in eligible instruments under Section 80C (up to ₹ 1,50,000) like ELSS Mutual Funds, PPF, NSC, etc.

4. Contribute to National Pension Scheme (NPS)

Contribute to NPS to avail an additional deduction of ₹ 50,000 under Section 80CCD (1B).

 5. Employer's NPS Contribution

Convince your employer to contribute to NPS on your behalf and get an additional deduction (up to ₹ 1,00,000) under Section 80CCD(2).

6. Home Loan Interest and HRA

Claim deductions on home loan interest (up to ₹ 2 lakhs) under Section 24. Structure your salary to include HRA for additional benefits.

7. Medical Insurance for Self

Pay medical insurance premiums for self and claim a deduction of up to ₹ 25,000 under Section 80D.

8. Medical Insurance for Senior Citizen Parents

Pay medical insurance premiums for senior citizen parents and claim a deduction of up to ₹ 50,000 under Section 80D.

9. Medical Treatment under 80DDB

Claim a deduction for medical treatment of a dependent relative suffering from specified diseases (up to ₹ 40k or ₹ 1 Lakh for senior citizens).

Salary                                        12,00,000    1. Section 16                             50,000  2. Profession tax                      2,500   Gross Total Income                11,47,500   Deductions List   3. Section 80C                          1,50,000  4. Section (80CCD (1B ))         50,000  5. (80CCD (2))                          1,00,000  6. Section 24, Section 10        2,00,000  7. Section 80D                          75,000  8. Section 80DDB                     1,00,000 Total Income TaxFree          4,72,500

Summary

By leveraging these tax saving strategies, individuals can effectively reduce their tax burden on a salary income of 12 lakhs.

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