Earning Rs 9.5 lakh per annum? Here's how to pay zero tax

Perhaps the first and the best way to save on taxes is to exhaust the section 80C tax benefit. Several investments and expenses are eligible under section 80C. You can invest up to Rs 1.5 lakh under the section 80C tax saving options like PPF ( public provident fund), NPS (national pension scheme), EPF (employee provident fund) (deducted from your salary), life insurance premium, tax-saving mutual funds (ELSS).

Expenses such as children’s tuition fees and housing loan principal repaid among others are also eligible for the claim. These investments/expenses can reduce your taxable earnings to Rs 8 lakh.

Becoming a homeowner is a great feeling. You have taken a huge stride in securing your financial future. You can claim deduction up to Rs 2 lakh for the interest component of your EMIs. If you have an ongoing home loan - you can claim its interest portion. This can bring down the total taxable income to Rs 6 lakh.

NPS comes with twin benefits of saving for retirement and claiming tax benefits on deposits made. By investing an additional Rs 50,000 in NPS, you can claim a deduction under section 80CCD (1B).

If you are a salaried individual, you can reduce your total income by Rs 50,000 through standard deduction. The limit of standard deduction has been recently raised in the budget to Rs 50,000 from Rs 40,000.

In this time and age, adequate health insurance for you and your family is a must. A deduction of Rs 25,000 on the premium paid on it is only one of the many perks. It is applicable to the insurance taken for you, your spouse, dependent children and parents. In fact, there is an additional benefit of Rs 25,000 under section 80D for insurance taken for your parents. This deduction can be higher, if your parents are senior citizens. Insure your family and they can help you save your taxes.

Let’s assume that you have an interest income from a savings account of Rs 10,000 included in the gross total income of Rs 9.50 lakh. With the provisions of section 80TTA, this interest income can also be nullified by claiming a deduction of maximum Rs 10,000.

After considering all the tax saving avenues mentioned above, you can reduce your taxable income and bring it under Rs 5 lakh and avail full tax rebate under section 87A.