How to pay Zero tax on Income up to 10 Lacs in FY 2018-19 and Zero tax up to 12 Lacs in next FY 2019-20 onwards?

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After all, a rupee saved is a rupee earned.

First, Have a look at all possible tax deductions available for you. I have listed below most of the deductions applicable to all individuals here. You may consider whichever is applicable to you.


CategoryPossible deductionsRemarks
Check list for possible deductions, ensure you check this before filing return.
Deduction under Sec 80C1,50,000/-Complete possible options under 80C is listed below
Additional exemption for NPS contribution 80CCD 1b50,000/-National Pension Scheme
House rent payment1,08,000/-Considered at 9,000/month, as it has a check on HRA and basic of your salary.
Exemption on transportation and Medical allowance40,000/-This can be availed without any bills. standard deduction as per Budget 2019 is 50,000/- effective from FY2019-20.
Interest on House loan exemption under section 24B2,00,000/-
Additional exemption on interest paid on home loan for first time home buyers-80EE- Rs. 50,000/--Not considered here as it may not be applicable for most of the people.
Section 80G- Donations-There are several donations which qualifies for 100% deduction & some with 50%, you may explore them as per your preference.
Leave Travel allowance (LTA)25,000/-Enjoy your vacation once in a year and take tax exemption
Health Insurance policy for family( Self, Spouse, Kids, Parents)50,000/-This insurance is a must have for all for any un fortunate diseases. Don’t forget to include cancer wording.
Fuel expenses reimbursements exempted upto 1Lac1,00,000/-This may be applicable based on your cadre and position in the company.
Mobile/telephone/Data card reimbursement Exemption33,000/-Many companies will give up to Rs. 50,000/- I have considered 33,000/- You may consider as per your eligibility.
News paper12,000/-This entirely depends on your company, many MNCs are not giving this as separate component, but better to check!
Meals/Lunch coupons12,000/-Again based on company, 1k/month is just minor amount considered here, many companies are giving lunch coupons worth 5000/- per month. Have a check!
Total of above deductions7,80,000/-
Current FY 2018-19- Considering Income as Rs. 10Lacs
Income from salary10,00,000/-
Taxable income2,20,000/-
Basic exemption2,50,000/-
Balance taxableZero
Tax Payable ZeroWith 10 Lacs income in FY 2018 -19
Applicable from FY 2019-20-on wards Considering Income as Rs. 12 Lacs & Budget 2019 announcements,
Total Deductions as per mentioned above7,80,000/-
Increase in Standard deduction in Budget 201910,000/-Changed from 40,000/- to 50,000/-in recent Budget 2019
Total Deductions available for FY 2019-207,90,000/-
Income from Salary12,00,000/-
Taxable Income4,10,000/-As per Budget 2019, If your taxable income is within 5Lacs, you will be eligible for rebate of up to Rs.12,500 under 87A
Basic Exemption2,50,000/-
Balance taxable1,60,000/-
Tax on above(at 5%)8,000/-
Rebate under 87A8,000/-Maximum is 12,500/-, so even if you could not take deductions in few of above as per your salary structure, you can still try this.
Tax PayableZeroWith 12 Lacs income from FY 2019 -20 onwards


  • Possible options to save tax under 80C, up to Rs. 1,50,000/-

    • Tax saving mutual funds schemes, ELSS
    • Term insurance premium
      • Term insurance is the best one for protecting your family, all other insurances are will not give you a huge sum as they need in case of any unfortunate event.
      • Term insurance with ELSS combination will work best in the long run.

    • savings in Public provident fund
    • savings in Employees Provident Fund (EPF)
    • savings in Bank Fixed deposit/Post office FDs for 5 years
    • savings in NSC deposits for 5 years
    • Senior Citizen Saving schemes in bank/Post office
    • Home Loan principal amount repayment
    • Children School tuition fees payment.
    • NPS-New Pension Scheme / National Pension System
    • Life Insurance plans premiums
    • Sukanya Samriddhi Yojana for girl child -SSY
  • Exemption for NPS contribution 80CCD 1b

    • You can make an investment in NPS scheme for Rs. 50,000/- you can claim deduction under 80CCD, this is over and above initial 1.5Lacs as in 80C.
  • House rent payment

    • You can claim rent paid to your accommodation, and this is linked to HRA, Basic salary, and your total salary
    • In case if you are not having HRA component in your salary, still you can claim a deduction with Minimum of following
      • 5000/ month
      • Rent paid minus 10% of the salary
      • 25% of your salary
  • Interest on House loan exemption under section 24B

    • Owning a house is a dream of many people, while you enjoy achieving that dream with a home loan, you can claim a deduction of up to 2 Lac on account of interest payment to a home loan.
    • This house can be self-occupied or rented to others.
    • Yes, you can avail this 2Lac benefit, even if you are staying in the rented home and takes credit of HRA for a rented house, this is applicable only when you are staying in a different location due to employment.
  • Additional exemption on interest paid on the home loan for first time home buyers-80EE

    • You can avail additional 50,000/- deduction if you are a first time home buyer and meet below conditions
      • Value of home must be less than 50Lac
      • The home loan must be less than 35Lac
      • The loan must be taken between April 2016 to Mar 2017
      • As this comes with many conditions, which is difficult to meet, I have not considered this deduction of Rs.50,000/- in the above calculations. If you meet this criterion, go ahead and claim deduction!
  • Leave Travel allowance ( LTA)

    • You can enjoy your vacation with family once in a year and take tax advantage, you can ask your employer about the rules /limit of your eligibility
    • You can also club 2 years LTA and take vacation travel once in two years take advantage of full limit for both years.
    • This covers only Travel costs. Accommodation /Stay/Food expenses will not be considered.
  • Health Insurance policy for family (Self, Spouse, Kids, Parents)

    • You can take Medical Health insurance premium to your family below is the summary
      • Self, Spouse, kids: Rs. 25,000/Yr and parents: Rs. 25,000/Yr so total Rs. 50,000/-
      • If your parents are above 60 yrs age, the limit for parents is increased to 50,000rs, in this case, you can claim total Rs.75,000/- deduction.
      • Health insurance is a must nowadays, considering the high costs of medical treatments
  • Various tax effective reimbursements you must consider

    • Fuel expenses reimbursements
    • Mobile/telephone/Data card reimbursement Exemption
    • Newspaper/Lunch coupons Meals etc.
  • Section 87A rebate :


Hope this helps in taking your tax decisions effectively, please write to me if you have any clarifications.

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  1. Summarized well. this gave me insight of all options for deductions.

    1. Welcome Ramesh.

  2. Very crisp & well explained…

    1. Thanks Purushothaman.

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