Tax Free Income: There will be no tax on annual salary of Rs 18,50,000, see expert’s calculation

Old Tax Regime: Under Section 80D, individuals can claim a tax deduction on medical insurance premiums of up to Rs 50,000 per financial year for senior citizens and Rs 25,000 for non-senior citizens.

Tax Free Income: Whenever there is time to file an income tax return (ITR), taxpayers often get confused about choosing the tax regime. However, since the government has announced changes in the income tax slabs of the new tax regime, it has become easier for the taxpayers under the annual income of Rs 12,00,000 as they don’t need to pay any taxes for that income. Moreover, this limit has been increased to Rs 12.75 lakh for salaried taxpayers, due to the standard deduction of Rs 75,000. On the other hand, the old tax regime remains favourite for many taxpayers as there are many options for deductions like EPF, PPF, home loan principal and interest, and life insurance premium. In this article, we will take a look at the tax slabs for the old tax regime (FY 2025-26) and also show expert calculations on how to make your annual salary of Rs 18,50,000 tax-free.

First, let’s know how much income is tax-free under the old regime

In the old tax regime, after a rebate, an annual income up to Rs 5 lakh is tax-free.

Exemptions and deductions

There are more than 70 exemptions and deductions available under the old tax regime. The most popular one is Section 80C.

What are the deductions under Section 80C?

Up to Rs 1.5 lakh can be claimed as a deduction from the total income. You can show EPF (employee provident fund), PPF (public provident fnd), ELSS (equity-linked savings scheme), NSC (national savings certificate), SSY (sukanya samriddhi scheme), SCSS (senior citizens savings scheme), among others.

Calculations of 0 tax on Rs 18.5 lakh annual salary

In this article, we will show expert calculations on how you can pay 0 tax on salary of Rs 18,50,000 per year. You can show many other deductions besides Section 80C. Here’s the step-by-step calculation:

Basic Salary

CTC: Rs 18,50,000
Basic pay: Rs 9,25,000

Salary after 80C deductions

Rs 18,50,000- Rs 1,50,000 (EPF, PPF, others)
= Rs 17,00,000

Section 80D deductions for Self

Under Section 80D, individuals can claim a tax deduction on medical insurance premiums of up to Rs 50,000 per financial year for senior citizens and Rs 25,000 for non-senior citizens.
Rs 17,00,000- Rs 25,000 = Rs 16,75,000

Section 80 D- Parents

50,000 is exempted under Section 80 D assuming age of parents is more than 60.
Rs 16,75,000- Rs 50,000 = Rs 16,25,000

Home Loan Interest

Further, you can take exemptions of up to Rs 2,00,000 under Section 24B for home loan interest.
Rs 16,25,000- Rs 2,00,000= Rs 14,25,000

Education loan interest

Education loan interest comes under Sec 80E of Income Tax Act. You can claim complete interest paid on education loan.

Here, we are taking Rs 90,000 exemption under education loan interest.
Now taxable income will be Rs 13,35,000 (Rs 14,25,000- Rs 90,000)

Standard deductions

Rs 50,000 standard deduction is allowed by the government.
Rs 13,35,000- Rs 50,000= Rs 12,85,000

NPS Contribution – Self+employer

Self NPS Contribution Under Sec 80 CCD 1B exempted from Income Tax and the maximum limit for this is Rs 50,000. You can also claim 10 per cent of your basic pay and dearness allowance under self employer’s NPS contribution (Section 80 CCD 2B).

Taxable income after NPS

We are taking Rs 50,000 self-contribution and Rs 1,08,000 employer’s contribution for NPS. Your taxable income after NPS deductions will be Rs 11,27,000- [Rs 12,85,000-(Rs 50,000+Rs 1,08,000)]

HRA exemption

Maximum HRA deduction is 4,80,000. This can be exempted under two conditions- actual HRA Received – Rs 6,00,000 and actual rent paid – 6,00,000 per annum.
Rs 11,27,000- Rs 4,80,000= Rs 6,47,000

Donations

Under sec 80G You can Claim Donation Maximum upto 10 per cent of Basic Pay. Here, we are taking donations of Rs 40,000.
Rs 6,47,000- Rs 40,000= Rs 6,07,000

Flexi-pay

LTA+ meal allowance +books and periodical
(Rs 60,000+ Rs 43,200+ Rs 21,600)= Rs 1,24,800
6,07,000- Rs 1,24,800= Rs 4,82,200

Final taxable income

Now, your final taxable income is Rs 4,82,000. This means your tax liability will be Rs 0, as in the old tax regime, after a rebate, an annual income up to Rs 5 lakh is tax-free.

The post Tax Free Income: There will be no tax on annual salary of Rs 18,50,000, see expert’s calculation first appeared on informalnewz.

News