How To Save Tax For Salary Above 15 Lakhs?

By Ektha Surana

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Updated on: Apr 29th, 2024

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30 min read

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 Rs15 lakh annual salary. 

 Latest Update As Per Finance Act 2023

Finance Act 2023 has provided new tax slabs under the new tax regime. Rebate under section 87A for those having taxable income upto Rs. 7 lakhs has been increased 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. 

Tax Slab

FY 2023-24 Tax Rate (Old tax regime)

Tax Slab

FY 2023-24 Tax Rate (New tax regime)

Up to Rs 2,50,000

Nil

Up to Rs 3,00,000

Nil

Rs 2,50,000 – Rs 5,00,000

5%

Rs 3,00,000 – Rs 6,00,000

5%

Rs 5,00,000 – Rs 10,00,000

20%

Rs 6,00,000 – Rs 9,00,000

10%

Rs 10,00,000 and beyond

30%

Rs 9,00,000 – Rs 12,00,000

15%

NA

NA

Rs 12,00,000 – Rs 15,00,000

20%

NA

NA

Rs 15,00,000 and beyond

30%

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:

Particular

Amount

Salary under section 17(1)

XXXXX

Less: Exemption u/s 10 (HRA, LTA etc.)

XXXXX

Less: Deduction u/s 16 (Standard deduction and professional tax)

XXXXX

Total Income

XXXXX

Less: Deduction under sections 80C,80D etc 

XXXXX

Net Total Income

XXXXX

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:

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 are 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

Rs 50 per meal (max 2 meals a day)

Annual= Rs 26,400 (50*2*22 days*12 months)

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 

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

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.

 

Standard Deduction

Rs 50,000 (Will be given to all without any restrictions)

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. 

Particular

Old tax regime

New tax regime

Gross Salary u/s 17(1)

15,00,000

15,00,000

Less: Exemption u/s 10

  

HRA Exemption

1,00,000

LTA Exemption

20,000

Children's education and hostel allowance (for 2 children)

9,600

Less: Deduction u/s 16

  

Standard deduction

50,000

50,000

Profession Tax

2,400

Income under the Head Salary

13,18,000

14,50,000

Less: Deduction under Chapter VI-A

  

Section 80C - PPF/LIC/ELSS

1,50,000

Section 80CCD(1B) - NPS

50,000

Section 80D - Medical insurance

25,000

Net Total Income

10,93,000

14,50,000

Tax Liability (Including Cess)

1,46,016

1,45,600

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. 

Related Articles:

How To Save Tax For Salary Above 7 Lakhs?

How To Save Tax For Salary Above 10 Lakhs?

How To Save Tax For Salary Above 12 Lakhs?

How To Save Tax For Salary Above 20 Lakhs?

How To Save Tax For Salary Above 30 Lakhs?

How To Save Tax For Salary Above 50 Lakhs?

How To Save Tax For Salary Above 1 Crore?

Frequently Asked Questions

Which tax regime is better for a 15 lakh salary?

The selection of the best tax regime depends upon the exemption and deduction that is applicable in your case. Careful comparison must be made to analyse the best option for you. You can check out our tax calculator to determine the best option for you.

Can I pay zero tax on 15 lakh salary?

Deductions and exemptions allowed under the old and new tax regime will help you understand if you can pay zero tax on 15 lakh salary.

About the Author

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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Quick Summary

High-income earners can save taxes by utilizing deductions in the Income Tax Act. New tax regime slabs offer lower rates but fewer deductions compared to the old regime. Various tax-saving measures available for those with salaries above Rs 15 lakhs. Deductions can be claimed for investments, health insurance, charitable donations, and home loan interest payments. Calculating tax under old and new regimes can help in choosing the most beneficial tax-saving strategies.

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