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HATE Paying Taxes? Inspect How to Pay 0 INCOME Tax Obligation on SALAY of Rs 20+ Lakh (FY 2020-21).

by Dec 29, 2020Bank, income tax, Informative, Investing0 comments

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December 29, 2020

HATE Paying Taxes? Inspect How to Pay 0 INCOME Tax Obligation on SALAY of Rs 20+ Lakh (FY 2020-21).

Bank, income tax, Informative, Investing | 0 comments

HATE Paying Taxes? Inspect How to Pay 0 INCOME Tax Obligation on SALAY of Rs 20+ Lakh (FY 2020-21).

Salaried class have always complained of raw deal year after year in income tax laws. But the good news is you can still take care of to pay No (NIL) income tax on salary of up to Rs 20 lakhs (Salary below means expense to company). All you require to have is right salary framework as well as spend in RIGHT Tax conserving strategies!

Contents

  • 1 Ideal Salary Framework for Saving Tax.
  • 2 Earnings Tax Obligation Computation for Salary (FY 2020-21):
  • 2.1 Tax Obligation Exempt Income Parts.
  • 2.2 Tax Deductions:.
  • 2.3 HRA or Home Loan?
  • 3 Monthly Pay Slip (after Income Tax on Wage):
  • 3.1 Just How the Retired life Financial savings look?

Best Salary Structure for Saving Tax

Salary framework is very crucial to maintain tax obligations reduced:-The bright side is most employers are partially flexible with income structure. We give you one such sample income framework for CTC (Price to Company) of Rs 20 lakhs.

We have kept following to factors in mind:

  • Included all parts which are tax free.
  • For most advantage of HRA— it must be 50% of Fundamental wage (40% is excellent if rented houses remain in non-metro).
  • Cars Maintenance— The firm can compensate Rs 1,800 each month for auto less than 1600 CC (Rs 2,400 per month for larger automobiles) along with Rs 900 each month for chauffeur wage as tax free allocation.
  • Company can have option of registering for both NPS & EPF. Maintaining both makes salary much more tax obligation efficient, though take house might decrease.
  • Present Voucher worth Rs 5,000 per year is tax free. Some firms provide such vouchers at birthdays or anniversaries!
  • Company owned cars give much more tax obligation advantage as well as therefore is advised for high salaries.

Tax Exempt Salary Components

  • Car Maintenance.
  • Meal Coupons.
  • NPS (Employer Contribution).
  • EPF (Company Payment).
  • Smart Phone and Net Expense Repayment.
  • Uniform Allowance
  • Children Education/Hostel Allowance
  • Newspaper/Journal Allocation.
  • Gift coupon.
  • Leave Traveling Allowance.
  • Transport Allowance & Medical Reimbursement is No more tax free (from FY 2018-19 on wards)

HRA or Home Mortgage?

We have revealed the tax reduction on both HRA and Home Mortgage. There are people that believe that both can not be used at the same time. This is NOT true. You can take advantage of both HRA as well as Home Loan even if your home as well as rented out location remains in the very same city.

Regular Monthly Pay Slip (after Income Tax on Salary):.

We have actually seen the salary framework and how you need to pay 0 income tax obligation even when the CTC (Expense to firm) is Rs 20.41 lakhs. Currently lets take a look at how your Month-to-month Wage Slip would appear like.

Gross Income– Rs 1,32,500.

  • Fundamental Salary– 88,333.
  • HRA– 44,167.

Deductions– Rs 30,033.

  • NPS (Company Payment)– 8,833.
  • EPF( Company Contribution)– 10,600.
  • EPF( Employee Payment)– 10,600.
  • Income Tax obligation– 0.

Net Income = Rs 102,467 [1,32,500– 30,033]

Food/Gift Discount Coupon– Rs 2,200 monthly.

Additionally Worker would certainly obtain Food Coupons worth Rs 2,200 on a monthly basis (which can be utilized for meals, dining in a restaurant in restaurants or getting grocery).

Repayment (on entry of expenses)– Rs 1,35,600 (Yearly).

  • Cars and truck Upkeep– 28,800.
  • Phone and also Web Expense Reimbursement– 36,000.
  • Uniform Allowance– 24,000.
  • Kids Education/Hostel Allocation– 4,800.
  • Newspaper/Journal Allowance– 12,000.
  • LTA (Leave Traveling Allocation)– 30,000.

As you can see the monthly payout is low and a great deal of parts are compensation. To balance this a lot of companies pay all repayment month-to-month and deduct taxes at the end of year if the costs is not sent.

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