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 the 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:
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 the 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.
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.
