Page 12 - HDFC Bank | Take the cut out of your tax cut

Scenario 1:

Mr. Ram invested in instruments eligible for deduction under Sec 80C amounting to Rs.1,50,000
[Life Insurance (35,000), Mutual funds(40,000), 5 Years Fixed Deposit (35,000) and in PPF (40,000)}
B) Taxable Income after investment = Rs 12.25 lakhs – Rs. 1.5 Lakhs = Rs. 10.75 lakhs

TTax payable on Rs.10,75,000
Tax Slab Amount earned Tax Tax Amount

Up to Rs. 2,50,000 2,50,000 Nil Nil
Rs. 2,50,001 to Rs. 5,00,000 2,50,000 5% 12,500

Rs. 5,00,000 to Rs. 10,00,000 5,00,000 20% 1,00,000
Above Rs.10,00,000 75,000 30% 22,500

Income Tax (i) 1,35,000

Educational Cess @ 4% on (ii) 5,400
Total Tax Liability [(i)+(ii)] 1,40,400 (B)
Total Tax Savings (A-B) Rs. 46,800

Scenario 2:

Mr. Ram invested in instruments eligible for deduction under Section 80C amounting to Rs.1,50,000
[Life Insurance (35,000), Mutual funds (40,000), 5 Years Fixed Deposit (35,000) and in PPF (40,000)]
He further takes Health Plan eligible for deduction under Section 80D amounting to Rs. 75,000
[Self (Rs. 25,000) and Parents Senior Citizens (Rs. 50,000)]

C) Taxable Income after investment = Rs. 12.25 lakhs – Rs. (1.50 + 0.75) lakhs = Rs. 10 lakhs

Tax payable on Rs. 10,00,000

Tax Slab Amount earned Tax Tax Amount

Up to Rs. 2,50,000 2,50,000 Nil Nil
Rs. 2,50,001 to Rs. 5,00,000 2,50,000 5% 12,500

Rs. 5,00,000 to Rs. 10,00,000 5,00,000 20% 1,00,000

Above Rs.10,00,000 75,000 30% 22,500

Income Tax (i) 1,12,500

Educational Cess @ 4% on (ii) 4,500

Total Tax Liability [(i)+(ii)] 1,17,000 (C)

Total Tax Savings (A-C) Rs. 70,200

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*Based on Retail Loan book size (excluding mortgages). Source: Annual Reports FY 20-21 and No.1 on market capitalisation based on BSE data as on 31st Dec, 2021