How To Save Tax For Salary Above 10 Lakhs?

Updated on: Feb 20th, 2026

4 min read

For a salary level of Rs. 10 lakhs, the tax liability under the new regime is nil, due to relaxed tax slabs and increased rebate up to Rs. 12 lakhs. However, under the old regime, the tax liability differs based on the amount of tax saving deductions available to the assessee.

Tax Deductions under the Old Regime

Under the old regime, there are various deductions and exemptions available against salary income. The following table demonstrates the maximum deductions and exemptions available against salary income.

Exemptions

Salary Components	Taxability
Basic Pay	Fully-taxable
Dearness Allowance (DA)	Fully-taxable
House Rent Allowance (HRA)	Exemption up to a certain limit.
Leave Travel Allowance (LTA)	Actual travel ticket expenses exempt for two trips in 4 years under 10(5). Read more
Mobile/ Internet reimbursement	Exempt if:
	– used predominantly for office purposes
	– proofs/bills submitted
Children’s Education and Hostel allowance	Rs 4800 per child (max 2 children)
Food Expenses	Rs 50 per meal (max 2 meals a day)Annual= Rs 26,400 (50222 days*12 months)

Deductions

Particulars	Limit
Standard Deduction	Rs 50,000 (Will be given to all without any restrictions)
Professional Tax	Generally Rs 2,400 (Varies from state to state)
Paying health insurance policy premium (Section 80D)	Self, your spouse, and your dependent children:
	Rs 25,000 (Rs 50,000 if aged 60 and above)
	Parents: Rs 25,000 (Rs 50,000 if aged 60 and above)
Opting for an education loan (Section 80E)	Interest deduction for 8 years from the year of repayment of loan taken for the higher education of yourself, your spouse, dependent children, or a student of whom you are the legal guardian.
Donating to charity (Section 80G)	50% or 100% of the eligible amount.
Investing in tax saving instruments (Section 80C)	Tax benefit of Rs.1,50,000 per year. You can invest in the
	following options:
	– Employees’ Provident Fund (EPF)
	– Public Provident Fund (PPF)
	– Equity Linked Saving Scheme funds (ELSS)
	– Home loan repayment and Stamp duty
	– Sukanya Smriddhi Yojana (SSY)
	– National Savings Certificate (NSC)
	– Fixed Deposit for 5 years, and more
Costs to treat disabled dependents (Section 80DD)	If you have disabled dependents for whom you bear
	medical expenses, you are eligible for the tax relief:
	– 40% disability: Rs.75,000
	– Severe or 80% disability: Rs.1,25,000
Deductions on home loan payments	Principal amount: Upto Rs 1.5 lakhs u/s 80C
Deductions on home loan payments	Interest amount: Upto Rs 2 lakhs paid u/s 24b
The maturity amount of a Life Insurance Policy	Maturity proceeds are tax-exempt if the sum assured is ≤:
	– 20%: policies issued before 1 April 2012
	– 10%: policies issued after 1 April 2012
	– 15%: policies issued after 1 April 2013 for a person with disability or disease.

How to Save Taxes for 10 Lakh Salary?

Taxpayers with Rs. 10 lakh salary can save tax by opting to file ITR under the new tax regime. With a tax rebate up to Rs. 60,000 under section 87A, Rs. 10 lakh income will have zero tax liability making the entire income tax-free.

Example on Calculation of Tax under New and Old Tax Regime

Mr. A has a salary income of Rs. 10 lakhs. He is eligible for the following deductions:

HRA exemption of Rs. 1.5 lakh
Section 80C of Rs. 1.5 lakh
Medical insurance premium of Rs. 25,000

His tax liability for FY 2025-26 will be as follows under both the old and new tax regime:

Particulars	Old Tax Regime	New Tax Regime
Income From Salary	10,00,000	10,00,000
(-) HRA Exemption	1,50,000	-
(-) Standard Deduction	50,000	75,000
	8,00,000	9,25,000
(-) Section 80C	1,50,000	-
(-) Section 80D	25,000	-
Taxable Income	6,25,000	9,25,000
Tax Liability	39,000	32,500
Rebate	-	(32,500)
Net Tax Liability	39,000	0

Due to the increase in the rebate limit to Rs. 60,000 for FY 2025-26, Mr. A will be able to save tax of Rs. 32,500 thus paying zero tax.

Final Word

For taxpayers earning an income of Rs. 10 lakh in FY 2025-26, the best regime is the new tax regime as they are eligible for tax rebate and effectively pay zero tax.

Frequently Asked Questions

How to claim deductions under Section 80C?

You can claim deductions under Section 80C when you file your income tax returns at the end of each assessment year.

How much income is tax-free according to the Income Tax Act?

According to the Income Tax Act, an individual earning up to Rs.2,50,000 per year is tax-free.
However, for people aged 80 and above, Rs.5,00,000 is tax-exempt. Likewise, people aged 60 to 79 have a tax exemption limit of Rs.3,00,000.

However under the new tax regime the basic exemption limit for every taxpayer despite the age limit is Rs 3,00,000.

Can one claim Rs.1.5 lakh deduction for more than one investment policy?

No, according to Section 80C, Rs.1.5 lakh is the maximum deduction amount you can claim regardless of the number of investment policies. However, if you form a HUF, you can avail the 80C benefits of Rs.1.5 lakh for yourself individually and Rs. 1.5 lakhs for the HUF.

Can you save 100% tax?

Yes, it is possible to save 100% on tax. However, it requires adequate tax planning and investments.

Can one avail of tax deductions by investing in post office schemes?

Yes, under the old tax regime, you could save taxes under Section 80C of the Income Tax Act by investing in post office schemes.

Which tax regime should I choose if my salary is Rs.10,00,000?

If your salary is Rs. 10,00,000 then opt for the new tax regime as the entire income is eligible for rebate and is effectively tax-free.

How does one qualify for a deduction under section 80C?

To claim a deduction under section 80C, taxpayers must choose the old regime and invest in specified schemes such as PPF, NPS, life insurance, and other eligible tax-saving instruments.

About the Author

Ektha Surana

Content Marketer

Multitasking between pouring myself coffees and poring over the ever-changing tax laws. Here, I've authored 100+ blogs on income tax and simplified complex income tax topics like the intimidating crypto tax rules, old vs new tax regime debate, changes in debt funds taxation, budget analysis and more. Some combinations I like- tax and content, finance & startups, technology & psychology, fitness & neuroscience. Read more

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