How to save tax on 13 lakhs salary
The new tax system was introduced by Finance Minister Nirmala Sitharaman in Budget 2020, offering taxpayers the choice to select between it and the current tax system when they file their taxes. There is a catch even if the new tax slab would result in reduced rates of taxation on your income. You won’t be able to further reduce your tax obligation by using the Income Tax Act deductions as you once could.
The majority of them fall beneath the Rs 1.5 lakh threshold, making investments in the Public Provident Fund, life insurance policies, and tax-saving fixed deposits among the most popular. I am talking about some important way how to save tax on 13 lakhs salary.
How to save tax on 13 lakhs salary in India
According to 80CCD(1B) regulations, there is an extra tax advantage available for contributions to the National Pension Scheme of up to Rs. 50,000, bringing the total to Rs. When preparing your income tax return for FY 2019–20, there are a few things to bear in mind if you are in a higher tax band and hope to save money on taxes for income over 13 lakhs:
You read carefully all the points of how to save tax on 13 lakhs salary below
If you don't buy tax saving Products
The Finance Minister expressly mentioned in her budget address that under the new tax structure, an individual earning Rs 13 lakh annually and not taking any deductions will pay just Rs 1.95 lakh in taxes, compared to Rs 2.73 lakhs under the previous system. In order to do this, you must forego the standard deduction of Rs. 50,000 for FY 2019–20 as well as the tax benefits described in Chapter VI A of the Income Tax Rules. As seen below.
|Old Tax Structure||Tax Calculation||New Tax Structure||Tax Calculation|
|5%||12,500||5% + 10%||12,500 + 25,000|
|20%||10,000||15% + 20%||37,500 + 50,000|
|30%||15,00,00||25% +30%||62,500 + 0|
|Total (1+2+3)||2,625,00||Total (1+2+3)||187500|
|Cess (4%)||10,500||Cess (4%)||7500|
|Income Tax||273000||Income Tax||195000|
If you put down up to 1.5 lakh
If you follow the traditional tax-paying method despite having investments in the Public Provident Fund, Employees Provident Fund, Sukanya Samriddhi Scheme, life insurance or health insurance premiums, tax-saving fixed deposits from banks or post offices, or any other provisions that allow tax exemption up to Rs 1.5 lakh, you still stand to lose Rs 31,200 in tax savings. Even in this situation, the new tax system would benefit you. Hope you have given our points to your question how to save tax on 13 lakhs salary. will solve a great deal.
Up to 1.5 lakh deducted (Section 80C, 80CCC, 80CCD)
a) Financial Protection Investments
- Term Insurance Plans
- Life Insurance Plans
b) Invest for Long-Term Goals & Retirement
- Unit Linked Insurance Plans (ULIPs)
- Plans for retirement or annuities from life insurance providers
- EPF and PPF, or employee and public provident funds (EPF)
- New Pension Scheme Tier-I Account
- Senior Citizen Savings Scheme
- Purchase a home – Registry and main payments on a mortgage
80CCD Additional Reduction of Up to 50,000 for NPS Investors
a) The maximum deduction available on self-contribution to an NPS Tier-1 account is limited to:
- 10% of annual income for salaried investors
- 20% of annual income for self-employed investors
b) You are able to donate more money and receive an annual deduction of up to Rs 50,000.
Up to 75,000 can be deducted (Section 80D)
a) Health insurance for yourself and your family
- if you are under 60, reduces your taxable income by up to Rs 25,000.
- includes up to Rs 5000 towards costs for preventative health checks.
- Include your children under the age of 25 in the same plan.
b) Health Insurance for your parents
- Reduce your taxable income by up to Rs 50,000 more if parents are 60 or above (Rs 25,000 for those below 60)
- You can also claim medical costs for elderly parents.
- Include up to Rs. 5,000 in costs for preventative health checkups.
Up to 2 lakh can be deducted from your taxable income (Section 24)
a) If you bought or constructed a home using a home loan the principal and interest payment on the loan allows for a tax deduction
b) Section 24B allows for a deduction of up to Rs 2 lakh in interest payments.
c) Section 80C allows for the claim of principal repayment.
Hope you have liked our article on how to save tax on 13 lakhs salary.