Will I get full 1 lac tax deduction or maximum 20% of my income ?

POSTED BY sha faisal ON December 18, 2013 2:19 pm ONE COMMENT

Hello,

I have a query regarding tax deduction. Assuming that after all deductions (HRA, PF, Medical, Variable Pay etc) my taxable income is 4 lakhs per annum, and if I now show 1 lakh under 80c the taxable income would be 3 lakhs. So I need to pay 10% tax on 3 lakhs i,e 30,000 + 3% Educational Cess tax. Is this correct?

I have heard from some of my friend that though we show 1 lakh towards 80c, only 20% will be taken into tax exemption but not total 1 lakh. Can you please suggest who is correct in this case and how much amount would I be paying towards tax even if I show 1 lakh under 80c.

Regards,

Faisal

One reply on this article “Will I get full 1 lac tax deduction or maximum 20% of my income ?”

  1. ashalanshu says:

    Dear Sha faisal, your basic calculation is correct. You ‘ll get deduction from your income and thus the taxable income ‘ll come down to 3L Rs. and ‘ll be taxed acordingly.

    Thanks

    Ashal

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