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How to Save Tax For Salary Above 15 Lakhs?

Updated on :  

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 IncomeOld Tax RegimeNew Tax Regime
Up to Rs 2.5 lakhsNilNil
>2.5 lakhs – Rs 5 lakhs5% (however full rebate)5%
>5 lakhs – Rs 7.5 lakhs20% + Rs  12,50010% + Rs 12,500
>7.5 lakhs – Rs 10 lakhs20% + Rs  12,50015% + Rs 37,500
>10 lakhs – Rs 12.5 lakhs30% + Rs 1,12,50020% + Rs 75,000
>12.5 lakhs – Rs 15 lakhs30% + Rs 1,12,50025% + Rs 1,25,000
>15 lakhs and above30% + Rs 1,12,50030% + 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 ComponentTaxability
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 allowanceRs  4800 per child (max 2 children)
FoodRs 50 per meal (max 2 meals a day)Annual=
Rs 31,200 (50*2*26 days*12 months)
Standard DeductionRs 50,000 (Will be given to all without any restrictions)
Professional TaxGenerally 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 Salary15,00,000
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 Income13,03,800
Less: Deductions
80C (Refer Note below)(1,50,000)
80D(50,000)
80E(25,000)
Net Taxable Income10,78,800
Tax on the above income1,36,140
Rebate u/s 87ANA
Total Tax1,36,140 + 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:  

  1. ELSS mutual funds- Rs 60,000 (Investment: Rs 500 per month SIP, Returns- 12% CAGR, Lock-in-period: 3 years)
  2. Term plan insurance- Rs 12,000 premium (Around Rs 1 Crore cover)
  3. ULIP or endowment plant- Rs 12,000 premium
  4. Children’s Education fees: (Rs 25,000 to Rs 1 lakh) 
  5. 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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