How to Save Tax For Salary Above 15 Lakhs?

Updated on : Dec 19, 2022 - 12:45:02 PM

08 min read.

Individuals belonging to the high-income groups often conduct tax planning for salary above 15 lakhs in order to reduce the burden of taxes on their income. The Income Tax Act provides several options to taxpayers for claiming deductions and lowering the tax liability.

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

Know the tax slabs under the old vs new regime

The old regime allows for several deductions that are absent in the new one. However, the tax rates under the new regime are lower than that of the old tax regime. All the deductions that you will see in this article are based on the old one.

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

Annual Income	Old Tax Regime	New Tax Regime
Up to Rs 2.5 lakhs	Nil	Nil
>2.5 lakhs – Rs 5 lakhs	5% (however full rebate)	5%
>5 lakhs – Rs 7.5 lakhs	20% + Rs 12,500	10% + Rs 12,500
>7.5 lakhs – Rs 10 lakhs	20% + Rs 12,500	15% + Rs 37,500
>10 lakhs – Rs 12.5 lakhs	30% + Rs 1,12,500	20% + Rs 75,000
>12.5 lakhs – Rs 15 lakhs	30% + Rs 1,12,500	25% + Rs 1,25,000
>15 lakhs and above	30% + Rs 1,12,500	30% + Rs 1,87,500

Ways to lower tax for income of 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:

Salary (-) Exemptions = Taxable Salary Income
Taxable Salary Income (-) Deductions = Net taxable income.

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

1. Exemptions

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

Salary Component	Taxability
Basic	Fully taxable
Dearness Allowance	Fully taxable
House Rent Allowance (HRA)	Exempt up to a certain limit. Calculate now
Leave Travel Allowance (LTA)	Actual travel ticket expenses exempt for 2 trips in 4 years under 10(5). Read more
Mobile/ Internet reimbursement	Exempt if: – used predominantly for office purposes – proofs/bills submitted
Children Education and Hostel allowance	Rs 4800 per child (max 2 children)
Food	Rs 50 per meal (max 2 meals a day)Annual= Rs 31,200 (50226 days*12 months)
Standard Deduction	Rs 50,000 (Will be given to all without any restrictions)
Professional Tax	Generally Rs 2,400 (Varies from state to state)

2. Deductions

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

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 – 80% disability: Rs.1,25,000
Deductions on home loan payments	Principal amount: Upto Rs 1.5 lakhs u/s 80C Interest amount: Upto Rs 2 lakhs paid u/s 24b
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 calculate income tax on salary above 15 lakhs?Tax calculation example

As an individual who earns more than Rs 15 lakh per annum, you must be wondering how much tax will be deducted for 15 lakhs. Take a look at this example for better understanding.

Gross Salary	15,00,000
Less:
HRA	(1,25,000)
LTA	(20,000)
Reimbursements	(20,000)
Children education and hostel allowance	(9,000)
Standard Deduction	(40,000)
Professional Tax	(2200)
Taxable Salary Income	13,03,800
Less: Deductions
80C (Refer Note below)	(1,50,000)
80D	(50,000)
80E	(25,000)
Net Taxable Income	10,78,800
Tax on the above income	1,36,140
Rebate u/s 87A	NA
Total Tax	1,36,140 + 4% cess

In addition, you can claim these deductions, if eligible:

Interest on home loan deduction u/s 24b	(2,00,000)
Home loan 80EEA	(1,50,000)
Investments in National Pension Scheme (NPS) u/s 80CCD(1B)	( 50,000)

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 plant- 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)

Now, according to the new tax regime, your payable tax amount will be Rs 90,760 + 4% cess.

Now that you know the ways of how to save tax on 15 lakhs salary, you can use them to reduce your taxable income. However, the government’s tax policies tend to change every year. So, it is crucial for you to keep a tab on the latest updates while making your tax saving plans.

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How to Save Tax For Salary Above 15 Lakhs?

Know the tax slabs under the old vs new regime

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How to calculate income tax on salary above 15 lakhs?Tax calculation example

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