There are multiple tax-saving techniques that taxpayers can make use of in order to reduce their tax burdens. These methods come in handy for those individuals who have a high yearly income.
If you belong to the above 50 lakh tax slab, you can opt to reduce the tax liability using any of the tax-saving options below. The guide below states how much tax will be deducted for 50 lakhs and various tax-saving methods you can use to reduce your yearly taxable income.
In the Budget 2025, a significant change in the tax slabs and rates was introduced. The slab limits were enhanced to blocks of 4 lakhs and a tax rate of 25% was also introduced.
The revised tax slabs under the new regime for FY 2025-26 (AY 2026-27) are as follows:
Income Tax Slabs | Tax Rate |
Upto Rs. 4 lakhs | NIL |
Rs. 4 lakhs - Rs. 8 lakhs | 5% |
Rs. 8 lakhs - Rs. 12 lakhs | 10% |
Rs. 12 lakhs - Rs. 16 lakhs | 15% |
Rs. 16 lakhs - Rs. 20 lakhs | 20% |
Rs. 20 lakhs - Rs. 24 lakhs | 25% |
Above Rs. 24 lakhs | 30% |
As per the new income tax guidelines, you can opt for either the new or the old regime while filing your taxes. Here is a difference between the two:
Tax Slab | FY 2024-25 Tax Rate (Old tax regime) | Tax Slab | FY 2024-25 Tax Rate (New tax regime) |
Up to Rs 2.5 lakhs | Nil | Up to Rs 3 lakhs | Nil |
Rs 2.5 lakhs – Rs 5 lakhs | 5% | Rs 3 lakhs – Rs 7 lakhs | 5% |
Rs 5 lakhs – Rs 10 lakhs | 20% | Rs 7 lakhs – Rs 10 lakhs | 10% |
Rs 10 lakhs and beyond | 30% | Rs 10 lakhs – Rs 12 lakhs | 15% |
NA | NA | Rs 12 lakhs – Rs 15 lakhs | 20% |
NA | NA | Rs 15 lakhs and beyond | 30% |
Note:
If you file your taxes according to the new regime, you cannot avail most of the tax benefits. To calculate your tax liability using both regimes, you may use the old vs new tax regime calculator.
Individuals opting for the new tax regime have limited scope for claiming exemption or deduction. The main purpose of introducing a new regime is to reduce the deductions and exemptions available in the Income-tax Act. In exchange for such exemption and deduction, taxpayers are given a lower tax slab, giving them an incentive to switch to the new regime.
However, even in the new regime, taxpayers can still claim certain exemptions or deductions as follows
Here's a detailed list of exemptions and deductions available under the Old vs New Regime.
You can conduct your tax planning by making use of certain exemptions and deductions that are allowed by the Income Tax Act. But you first need to understand your salary structure.
Your salary component may include various tax-exempt allowances. The remaining salary will be your taxable income.
Therefore, we can maximize tax savings through exemptions and deductions.
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) |
When you are tax planning for salary above 10 lakhs, you can get deductions on the following:
Paying health insurance policy premium | 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 | 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 |
Maturity amount of a Life Insurance Policy | Maturity proceeds are exempt if the sum assured is ≤: – 20%: policies issued before 1 April 2012 – 10%: policies issued on or after 1 April 2012 – 15%: policies issued on or after 1 April 2013 for a person with disability or disease. |
Standard Deduction | Rs 50,000 (Will be given to all without any restrictions) |
These are some of the ways in which you can reduce your tax burden under the old tax regime. However, there are several terms and conditions that are associated with each tax-saving method. The tax deductions can be claimed while filing for Income Tax Returns.
Irrespective of the regime you choose, you can consider the below points to derive maximum benefits of the deductions available under the Income Tax Act.
The following table describes the quantum of deduction available under both the regimes for contributions made by the employer in the NPS scheme under section 80CCD (2)
Particulars | Central / State Government Employer | Other Employer |
Old Regime | 14% of salary (basic + DA) | 10% of salary (basic + DA) |
New Regime | 14% of salary (basic + DA) | 14% of salary (basic + DA) |
Deduction under section 80JJA is available irrespective of choice of regime of the assessee. 30% of the amount expended on additional employees can be allowed as a deduction.
In the above discussion, we understood the tax deductions and exemptions available under the old and new tax regimes. Considering all the tax-saving investments, let us calculate the income tax under each regime and compare the tax liability using the example below.
Example: Mr A has a Salary income of Rs. 50 lakhs. He can claim an HRA exemption of Rs. 3.5 lakhs, LTA exemption of Rs. 60,000, Children's education and hostel allowance of Rs. 9,600. Profession Tax of Rs. 2,400. He has also invested Rs. 1.5 lakhs in PPF, paid a medical insurance premium of Rs. 50,000 towards senior citizen parents. He paid Rs. 25,000 towards his child’s interest on an education loan.
Particulars | Under the Old Tax Regime (FY 2025-26) | Under the New Tax Regime (FY 2025-26) |
Gross Salary | 50,00,000 | 50,00,000 |
Less: Exemption u/s 10 |
| |
HRA | (3,50,000) | NA |
LTA | (60,000) | NA |
Children's Education and Hostel allowance | (9,600) | NA |
Standard Deduction | (50,000) | (75,000) |
Professional Tax | (2400) | NA |
Taxable Salary Income | 45,28,000 | 49,25,000 |
Less: Deductions |
| |
80C (Refer Note below) | (1,50,000) | NA |
80D | (50,000) | NA |
80E | (25,000) | NA |
Net Taxable Income | 43,03,000 | 49,25,000 |
Tax on the above income | 11,03,400 | 11,67,500 |
NA | NA | |
Total Tax (Including 4% cess) | 11,47,536 | 10,99,800 |
By opting for the new tax regime, the taxpayer will be able to save Rs. 47,736 in taxes in FY 2025-26.
Particulars | Under the Old Tax Regime | Under the New Tax Regime |
Gross Salary | 50,00,000 | 50,00,000 |
Less: Exemption u/s 10 |
| |
HRA | (3,50,000) | NA |
LTA | (60,000) | NA |
Children's Education and Hostel allowance | (9,600) | NA |
Standard Deduction | (50,000) | (75,000) |
Professional Tax | (2400) | NA |
Taxable Salary Income | 45,28,000 | 49,25,000 |
Less: Deductions |
| |
80C (Refer Note below) | (1,50,000) | NA |
80D | (50,000) | NA |
80E | (25,000) | NA |
Net Taxable Income | 43,03,000 | 49,25,000 |
Tax on the above income | 11,03,400 | 11,67,500 |
NA | NA | |
Total Tax (Including 4% cess) | 11,47,536 | 12,14,200 |
By opting for the old tax regime the taxpayer will be able to save Rs. 66,664 in taxes.
Moreover, eligible individuals can also claim these deductions:
Interest on home loan deduction u/s 24b | (2,00,000) |
Home loan 80EEA (Applicable only for loan sanctioned between 1st April 2019 to 31st Mar 2022) | (1,50,000) |
Investments in National Pension Scheme (NPS) u/s 80CCD(1B) | ( 50,000) |
Interest on Electric Vehicle Loan u/s 80EEB (Applicable only on loan taken between 1st April 2019 to 31st Mar 2023) | (1,50,000) |
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:
In the above example, the tax liability paid under the old tax regime is lesser than the new tax regime. Hence in the given example, the taxpayer has to choose the old tax regime to avail minimum tax liability.
In conclusion, if you are a taxpayer with income more than 50 lakhs investing in tax-saving options will be beneficial while paying tax to the government. However, a comparative analysis is required based on a specific Individual. This can be done using our Income Tax calculator.
As you can see from the calculation above, your tax liability changes depending on the tax regime you choose and the investments you've made. If you've made significant investments in eligible schemes, the old tax regime usually works out better because of the various deductions it offers. On the other hand, if you haven’t made many investments, the new tax regime—with its lower tax slab rates—might actually help you save more. So, it really comes down to your individual financial situation.
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