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Tax planning involves using legal credits and deductions to minimize taxable income. In India, deductions under Section 80C, 80D, and HRA exemptions can significantly reduce income tax. It is critical to compare whether the Old tax regime (with deductions) or the New regime (lower rates, no deductions) fits your salary structure.
A salary of ₹8,000,000 can be reduced to ₹6,25,000 taxable income by maxing out 80C (₹1.5L) and 80D (₹25k).
Test your understanding of the core concept.