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Example 3 -
Mr. Shyam, age 40 years earns Rs. 18 Lakhs as annual salary. He pays Rs. 35,000 towards his life insurance premium. He
also invests in ELSS Mutual Funds through SIP, total amounting to Rs. 30,000, invests Rs. 50,000 in Fixed Deposits for
a period of 5 years and Rs. 40,000 in PPF. He has also invested in National Pension Scheme (Rs. 50,000). He has also
invested in a Health Insurance Plan - Self (Rs. 25,000) and Parents Senior Citizens (Rs. 50,000).
Sec 80 C & Sec 80 D Benefits
Mr. Shyam’s Salary - Rs.25 lakhs
Computation of Tax
A) Taxable Income without any investment = Rs 25 Lakhs
Tax payable on Rs.25,00,000
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 15,00,000 30% 4,50,000
Income Tax (i) 5,62,500
Educational Cess @ 4% on (ii) 22,500
Total Tax Liability [(i)+(ii)] 5,86,000 (A)
Mr. Shyam invested in instruments eligible for deduction under Sec 80C amounting to Rs.1,50,000
[Life Insurance (35,000), Mutual funds(30,000), 5 Years Fixed Deposit (50,000) and in PPF (40,000)}
He also invests in National Pension Scheme Rs 50,000 eligible for deduction under Sec 80CCD(1B)
He further takes Health Plan eligible for deduction under Sec 80D amounting to Rs. 75,000
[Self (Rs. 25,000) and Parents Senior Citizens (Rs. 50,000)]
B) Taxable Income after any investment = Rs 25 lakhs – Rs. (1.5 + 0.50 + 0.75) Lakhs = Rs. 22.25 lakhs
Tax payable on Rs.22,50,000
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 12,25,000 30% 3,67,500
Income Tax (i) 4,80,000
Educational Cess @ 4% on (ii) 19,200
Total Tax Liability [(i)+(ii)] 4,99,200 (B)
Total Tax Savings (A-B) Rs. 85,800
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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
