How To Save Tax For Salary Above 15 Lakhs?

People in the high-income bracket of salary above Rs 15 lakh often look for tax saving measures so they can pay the least in taxes. The Income Tax Act offers various opportunities for taxpayers to avail of deductions and decrease their tax obligations. With efficient tax planning, you can save significant amounts of taxes.

Here’s how you can save tax on Rs 15 lakh annual salary. 

Latest Update As Per Budget 2024

As per the latest Finance Act 2024, changes have been made in the slab rate for the new tax regime applicable for FY 24-25 as follows - 

In the new tax regime, the standard deduction has been increased from Rs.50,000 to Rs.75,000, and the deduction on family pension has also been increased from Rs.15,000 to Rs.25,000. 

Tax Slabs Under Old vs New Regime

The old regime allows for several deductions that are not available in the new one. However, the tax rates under the new regime are lower than that of the old tax regime. 

You can also use the old vs new tax regime calculator for better understanding. 

Above tax slabs under the old tax regime are applicable to those individuals aged less than 60 years. For individuals aged between 60 and 80 years basic exemption is Rs 3,00,000 and for individuals aged over 80 years, the basic exemption is Rs 5,00,000. The tax slab under the new tax regime is the same for all individuals.

Tax Savings For Salary Above 15 lakhs

Your salary structure contains several components that are exempted from taxation. The net taxable income is calculated on your salary in the following ways:

Tax Savings Under New Tax Regime

Following deductions are available under the new tax regime if you have a salary of more than 15 lakhs;

• Standard deduction up to Rs 50,000 (For Salaried employees).
• Section 80CCD(2) - Employer contribution to NPS.
• Section 80 CCH - Investment made in Agniveer Corpus.
• Section 57(iia) - Family Pension received.
• Exemption on voluntary retirement 10(10C), gratuity u/s 10(10) and Leave encashment u/s 10(10AA).
• Interest on Home Loan on the let-out property (Section 24).
• Transport allowances in case of a specially-abled person. 
• Conveyance allowance received to meet the conveyance expenditure incurred as part of the employment. 
• Any compensation received to meet the cost of travel on tour or transfer. 

Tax Savings Under Old Tax Regime

So, if you belong to the above 15 lakh tax slab, you can avail of tax deductions from the following.

1. Exemptions

You can find out your salary structure from the CTC, which generally looks like:

2. Deductions

You can get deductions on the following when you are tax planning for salary above 15 lakhs:

Note: You might not always have a home loan or be interested in the investment plans listed under Section 80C. However, you may consider these investments to make use of the entire Rs 1.5 lakh limit under 80C:  

• ELSS mutual funds- Rs 60,000 (Investment: Rs 500 per month SIP, Returns- 12% CAGR, Lock-in-period: 3 years)
• Term plan insurance- Rs 12,000 premium (Around Rs 1 Crore cover)
• ULIP or endowment plan - Rs 12,000 premium
• Children’s Education fees: (Rs 25,000 to Rs 1 lakh) 
• EPF: Around Rs 30,000 – Rs 72,000, i.e., 12% of your basic + DA (contribution already made by your employer)

Calculating Tax Under Old And New Tax Regimes

Ms Maya has a salary income of Rs. 15 lakhs. She can claim an HRA exemption of Rs. 1 lakh, an LTA exemption of Rs. 20,000 and a Children's education and hostel allowance of Rs. 9,600. Profession tax of Rs 2,400 was deducted from her payslip. She has invested Rs. 1.5 lakhs in PPF and made a voluntary contribution to NPS of Rs 50,000. She has paid a medical insurance premium of Rs. 25,000 for her own family. Tax calculation under the new and old tax regime will be as follows. 

Now, according to the new tax regime, your payable tax amount will be Rs 1,45,600 which is more beneficial in comparison to the old regime. In the above scenario, the tax liability to be paid by the taxpayer, including cess, differs as per the deductions and exemptions allowed under both regimes. Choosing the tax regime by an individual should be done keeping in mind the investments made and the deductions that can be claimed for the same. 

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