How to pay zero tax for income up to 10 lakhs in Financial Year 2017-18

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Everyone wants to manage their finances by balancing investment and saving tax. So, what are the various ways where we can get tax free income of up to Rs 10 Lakhs? Or how to pay zero taxes for Rs 10 Lakhs income? Here, you can get some answers that could be beneficial for you.

Deduction, Exemption and Reimbursement of Expenses For FY 2017-18 Amount
Basic Exemption 250000
PPF, Insurance, ELSS, FD, NSC, etc. (section 80C, 80CCC & 80CCD (1)) 150000
Investment in NPS (Section 80 CCD 1B) 50000
Contribution of NPS by Employer (Section 80 CCD 2) 150000
Home Loan Interest (First Time Buyer ) 250000
Tax Free Medical Allowance 15000
Tax Free Transport Allowance 19200
Medical Expenses for Self and Parents (80D) 50000
Leave Travel Allowance (Section 10(5)) 25000
Travel and Fuel Reimbursement — Office Travel 100000
Phone and Communication (Tele and Internet Expenses) 24000
News Paper and Periodicals 14000
Meal Coupons (up to Rs. 50 Per Meal is Tax Free) 12000
  1. Your basic income tax exemption – Rs 250,000:

There is nothing to discuss much about this as it is basic exemption. It can be up to 3 lacs for senior citizens.

  1. Claim 80C Exemption for Rs 150,000 (80 C, 80 CCC, 80CCD (1)):

Following are the eligible deductions u/s 80C.

  • Amount deposited in Public Provident Fund. You can open PPF account with any post office or banks.
  • Children tuition fees. No transport allowance / term fee is allowed as deduction.
  • Amount contributed towards the Employees Provident Fund (EPF).
  • Post office term deposit for 5 years / Bank FD scheme of 5 years.
  • National Saving Certifications (NSC) – 5 years and 10 years.
  • ELSS tax saving Mutual Funds.
  • Senior Citizen Savings Scheme from post office / bank.
  • Principal repayment of Home Loan amount.
  • National Pension System / New Pension Scheme (NPS).
  • Life Insurance Premium.
  • Amount deposited in Sukanya Samriddhi Account.
  1. Deduction under 80CCD (1B) towards NPS – Rs 50,000:

Employees can contribute to New Pension Scheme / National Pension Scheme (NPS) up to 10% of their salary. In such case, an employee is eligible to claim additional Rs 50,000 tax benefits apart from 80C.

  1. Employer contribution of NPS – Rs 100,000:

Under section 80CCD (2), employers are willing to help employees by contributing to schemes like NPS where employees would get tax exemption. They can contribute up to 10% of the salary.

  1. Claim interest on house property loan up to Rs 200,000:

If you have taken house loan, you are eligible to claim interest on home loan (which is termed as loss from house property) up to Rs 2 Lakhs. This is only interest from housing loan for first time buyers.

  1. Exemption of Transport Allowance for Rs 19,200 per annum:

From financial year 2015-16 still continues in FY 2017-18, the transport allowance exemption has been increased to Rs 1,600 per month i.e. Rs 19,200 per annum. In this there is no need to produce any proofs, but just claim as an exemption.

  1. Exemption for Health insurance premium up to Rs 25,000:

You can any health insurance plan and claim health insurance premium up to Rs 25,000 per annum.

  1. Medical allowance – Rs 15,000:

You can submit medical bills to your employer and claim upto Rs 15,000 as medical allowance as part of your total compensation (CTC). In case your employer does not allow for this deduction, you can claim this amount as exemption while filing income tax returns and claim as exemption. Additional you can claimthe medical insurance premium for parents up to Rs. 30000.

  1. Leave Travel Allowance – Rs 25,000:

LTA (Leave Travel Allowance) which can spend and claim exemption up to Rs 25,000. One can claim LTA twice in a period of 4 years and claim upto Rs 50,000 as one time in a 2 year period. This amount depends on the employer and may change from employer to employer.

Tax Free Allowances:

Below are some of the tax free allowances which employers are providing nowadays. They may change from employer to employer.

  1. Fuel expenses reimbursement upto Rs 100,000:

Many employers provide fuel expense reimbursement for their employees depending on their grade. At low-ranking, it may be at Rs 30,000, for employees who are earning above Rs 10 Lakhs per annum, employers are providing Rs 1 Lakh fuel expenses at a minimum.

  1. Phone / Mobile expenses reimbursement – Rs 24000:

Many employers provide reimbursement of phone and mobile bills up to Rs 24000 per annum as part of the CTC structure.

  1. Newspaper / Magazine reimbursements – Rs 14,000:

Some employers are giving reimbursements of newspaper / magazine to the extent of Rs 14,000 per annum for senior employees earning over Rs 10 Lakhs per annum.

  1. Food Coupons / Sodexo coupons – Rs 12,000:

Many MNC companies are providing Sodexo coupons as part of their CTC structure. If you are not taking them you are paying unnecessary taxes. Taking this amount on lower side as some are providing this as just 50 Rs. Per meal i.e 1000 Rs. per month, but some MNC companies are providing up to Rs 3,000 per month.

Hope so, by taking above deductions and perquisites you can earn Tax Free Income of Rs 10 Lacs and also have investment for making life secure and risk free.

Before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules, Author does not take any responsibility. Neither the author nor the website accepts any liability for the loss or damage of any kind arising out of information in this article or for any action taken in reliance there on.


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