New tax system: Income tax rates have not changed in the budget, know how there will be no tax on income up to ₹ 7.80 lakh! – News India Live

Finance Minister Nirmala Sitharaman has presented the budget (Budget 2024). Now people want to know what changes have happened in income tax. Let us tell you that no change has been made in income tax in this budget. If you choose the new tax system, you will be able to save tax up to Rs 7.80 lakh. A new tax regime was introduced by the government in the financial year 2020-21. Under this, the number of slabs for income tax deduction was increased, but the good thing is that the tax rate was reduced. However, in this you do not get all the other tax deductions except two deductions, which you get in the old tax system.

No tax up to Rs 7 lakh

If we talk about this year i.e. financial year 2023-24, then this time those choosing the new tax system will not have to pay any tax up to Rs 7 lakh. Even though the government has given you tax exemption on salary up to Rs 7 lakh in the new tax system, but if your salary is up to Rs 7.80 lakh, you are still going to benefit in the new tax system. Let us understand how.

The government has made some changes in the last budget to make the new tax system more attractive than the old tax system. Under this you will not have to pay any tax up to Rs 3 lakh. Whereas if your taxable income is up to Rs 7 lakh, then you will get tax exemption on Rs 3-7 lakh i.e. the remaining Rs 4 lakh also. Besides, the government has also given the benefit of two types of deductions to make it more attractive.

1- Standard Deduction

Employed people get a standard deduction of Rs 50 thousand in the old tax system. That means, no matter what your salary is, you will not have to pay any tax on Rs 50 thousand. This was also included in the new tax system in the last budget. In this way, you will not have to pay any tax on salary up to Rs 7.50 lakh, not Rs 7 lakh, because due to standard deduction, Rs 50 thousand will be reduced from your taxable income.

2- Corporate National Pension System

You can get some additional exemptions apart from the standard deduction by contributing to NPS through your employer. Tax exemption available to any employee on NPS is available under 80CCD. There are also two sub-sections in this – 80CCD(1) and 80CCD(2). 80CCD(1) is another sub-section of 80CCD(1B). In this, you get a rebate of Rs 1.5 lakh under 80CCD(1) and Rs 50 thousand under 80CCD(1B), but 80CCD(2) will give you income tax exemption even above this Rs 2 lakh.

How to avail additional exemption under 80CCD(2)

Under this, you will get exemption on the investment made by your employer in NPS. Many businesses obtain tax exemption by showing this investment as a business expense in their profit and loss statement. Under this, employees of private companies can invest up to 10 percent of their basic salary and dearness allowance in NPS and you will get tax exemption on this. Whereas if you are a government employee then this figure for you can be up to 14 percent.

How will salary up to Rs 7.80 lakh be tax free?

Suppose your package is Rs 7.80 lakh. In such a situation, your basic salary will be at least 50 percent of your CTC. Meaning your basic salary was Rs 3.90 lakh. Under 80CCD(2), you can get your employer to invest 10 percent of it i.e. up to Rs 39 thousand in a corporate NPS account, on which you will not have to pay any tax. So if your salary is Rs 7.80 lakh, then you will get standard deduction of Rs 50 thousand and tax exemption on corporate NPS of Rs 39 thousand. In this way, you will get a total exemption of up to Rs 89,000, which will reduce your taxable income to less than Rs 7 lakh (Rs 6.91 lakh) and your tax liability will become zero.

What needs to be done to get this discount?

Most companies provide NPS facility. You can invest in NPS by talking to the HR of your company. This investment is made from your basic salary and the result will be a reduction in the inhand salary you receive every month. The good thing will be that you will be able to get additional tax exemption. If your company does not have NPS facility then talk to HR once, he will guide you on this.

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