How to Pay Zero Taxes on Your ₹18 Lakh Salary: Tips from Shreyaa Kapoor

Have you ever wondered if it's possible to pay zero taxes on your ₹18 lakh salary? Shreyaa Kapoor, a finance influencer, shares her expert tips and tricks on how to legally reduce your tax liability to zero. This comprehensive guide will walk you through the various allowances and deductions available to you, helping you bring your taxable income down to a minimum. Read on to know more!

Restructure Your Salary with Allowances

Understanding Salary Restructuring

One effective way to minimize your tax liability is by restructuring your salary. By breaking down your salary into various allowances that are applicable to you, you can significantly reduce your taxable income. Here are some common allowances that can help:

• House Rent Allowance (HRA): HRA can be claimed if you live in a rented house. The amount exempted depends on your salary, rent paid, and the city of residence.
• Leave Travel Allowance (LTA): LTA covers travel expenses for you and your family within India. This allowance can be claimed twice in a block of four years.
• Conveyance Allowance: This allowance covers your transportation expenses between home and workplace. A standard exemption of ₹1,600 per month is allowed.
• Meal Coupons: Meal coupons provided by your employer are tax-exempt up to ₹50 per meal.
• Professional Development Allowance: Expenses incurred for professional development, such as attending seminars or workshops, can be claimed under this allowance.

How to Implement

Discuss with your employer the possibility of restructuring your salary to include these allowances. Ensure that you maintain proper documentation to support your claims.

Maximize Your Deductions

• Home Loan Deductions: If you have a home loan, you can claim deductions on both the principal and interest components. Under Section 80C, you can claim a deduction of up to ₹1.5 lakh on the principal amount. Additionally, under Section 24(b), you can claim a deduction of up to ₹2 lakh on the interest paid.
• Education Loan Deductions: Interest paid on an education loan can be claimed as a deduction under Section 80E. This deduction is available for up to 8 years or until the interest is fully repaid, whichever is earlier.
• Standard Deduction: A standard deduction of ₹50,000 is available to all salaried employees. This is a flat deduction that reduces your taxable income without the need for any specific expenditure.

Other Deductions

• Section 80D: You can claim a deduction for health insurance premiums paid for yourself and your family. The maximum deduction available is ₹25,000 for individuals and ₹50,000 for senior citizens.
• Section 80G: Donations to specified charitable institutions and relief funds are eligible for deduction under Section 80G.
• Section 80CCD(1B): Contributions to the National Pension System (NPS) are eligible for an additional deduction of ₹50,000.

How to Implement

To maximize your deductions, ensure you keep all relevant documents and receipts. Plan your investments and expenses to take full advantage of the deductions available.

Wise Use of Allowances and Deductions

Balancing Pay and Tax Savings

While using allowances and deductions can significantly reduce your taxable income, it's essential to balance this with your take-home pay. Remember that some allowances may reduce your net salary. Evaluate the trade-offs and decide on a structure that best suits your financial needs.

Strategic Planning

Consult with a financial advisor or tax consultant to help you plan strategically. They can provide personalized advice based on your specific financial situation and help you optimize your salary structure and deductions.

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By restructuring your salary and maximizing available deductions, you can significantly reduce your tax liability on a ₹18 lakh salary, potentially bringing it down to zero. Shreyaa Kapoor's tips offer a comprehensive guide to navigating the various allowances and deductions available. Use these strategies wisely to make the most of your earnings and enjoy the benefits of a well-planned financial strategy.