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Step 1: Open the Income Tax Calculator
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Step 2: Key in details from your payslip
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Step 3: Compute Income Tax
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As you see, you have a Gross Salary of INR 20 lakhs, so, you are supposed to pay income tax of INR 351000 if you choose the new regime.
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As of now, New regime is beneficial to you.
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Now, let me show you how to bring your income tax to nil.
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Step 4: Declare your contribution to National Pension Scheme(NPS)
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Let's declare your NPS contribution to Section 80CCD(2) which is the only deduction allowed in New regime.
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This deduction is also allowed in the old regime.
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Now, Compute Income Tax
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Your tax liability in New regime has come down to INR 335400.
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Step 5: Declare your House Rent
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Let's compute Income Tax
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As you see, your income tax has come down to INR 211077 as your HRA exemption is now calculated.
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At this point onwards old regime is beneficial to you.
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Step 6: Declare your investments under Section 80C
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Section 80C has a limit of INR 1.5 lakhs and it includes investments on Life Insurance Premium, Children's education, Housing Loan Principle repayment and so on.
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Let's declare those.
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As you see the income tax has come down to INR 194226
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Step 7: Declare your investments under Section 80D
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As you see the income tax has come down to INR 178626
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Step 8: Declare interest on Housing Loan
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Now the income tax has come down to INR 116484
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Step 9: Declare interest on education loan
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Now the income tax has come down to INR 79044
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Step 10: Declare donations to approved funds and charities
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Now the income tax has come down to INR 29124
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Step 11: Declare medical expenses against handicapped dependant
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Now the income tax has come down to 0
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Note that you have received Standard deduction of INR 50000, and a rebate of INR 12376.
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The income tax calculator helps you understand the tax calculation process and also helps you save tax by letting you experiment your investment declarations.
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The income tax calculator advises you on how to save maximum tax.
