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Calculate Your Income Tax Above 15 Lakh and How to Save it

Finance Minister Nirmala Sitharaman introduced the new tax regime in Budget 2020 giving taxpayers the option to pick out between it and the existing tax structure once they file their taxes. At the same time, your salary may be taxed at lower rates as per the new tax slab. You will not be able to use the deductions under the Income Tax Act in advance, and Income Tax Above 15 Lakh to lower your tax liability in addition.

As per authorities estimates, 5.3 crore taxpayers out of a total of 5.78 crores declare tax exemptions amounting to less than Rs 2 lakh. The most famous of those include investments in the Public Provident Fund, lifestyle coverage plans, tax-saving deposits, and many others most of which fall under the Rs 1.5 lakh most limit given as per Section 80C.

New Tax Regime Slabs as per Union Budget 2023

Individuals pay taxes on their annual salary based totally on the tax slab changes proposed in the Finance Bill at some stage in the price range session. However, the Union Budget 2023 provided the taxpayers with an option u/ Sec 115 BAC of the IT Act, 1961, to choose between salary tax slab prices with varying approaches.

Refer to the table under to check old vs. New tax slabs and the most salary tax applicable with no tax exemptions and deductions for the respective tax slabs

Also Read:- Income Tax Slab Rates for AY 2024-25 | How is Gratuity calculated in CTC? | Income Tax Slab and Rates for FY 2023-24

Old Income Tax Slab Structure(FY 2021-22)

New Income Tax Slab Structure(FY 2022-23)

How to Save Tax for Salary above 15 Lakhs?

Here are steps to follow to save tax for a salary above 15 lakhs

  1. Utilize Section 80C deductions: Invest in tax-saving contraptions including EPF, PPF, NSC, and ELSS to assert deductions as much as Rs. 1.5 lakh under Section 80C.
  2. Maximize home loan benefits: If you’ve got a home loan, ensure you declare deductions on each important and interest payment under Sections 80C and 24(b), respectively.
  3. National Pension Scheme (NPS): Contribute to NPS to avail more deductions under Section 80CCD(1B) up to Rs. 50,000.
  4. Health coverage charges: Invest in a comprehensive medical insurance policy for yourself and your circle of relatives to claim deductions under Section 80D.
  5. Optimise expert tax and well-known deduction: Deduct the professional tax paid and declare the standard deduction of Rs. 50,000 available for salaried people.
  6. Utilise HRA and LTA: If you’re a tenant, claim House Rent Allowance (HRA) based on rent paid. Additionally, utilize Leave Travel Allowance (LTA) for tax-free journey expenses.
  7. Explore tax-exempt allowances: Leverage allowances like conveyance allowance, phone, and medical reimbursements in the exempt limits to maximize tax financial savings.
  8. Invest in tax-saving fixed deposits: Consider tax-saving constant deposits with a lock-in period of 5 years, offering deductions under Section 80C.

Tax Savings Under New Tax Regime

Following deductions are available under the new tax regime when you have a salary of more than 15 lakhs

  • For salaried individuals – Deductions up to Rs 50,000
  • Section 80CCD(2) – Employer contribution to NPS
  • Section 80 CCH
  • Section 57(iia) – Family Pension obtained.
  • Exemption on voluntary retirement 10(10C), gratuity u.S.10(10) and Leave encashment u.S.A.10(10AA)
  • Interest on Home Loan on the permit-out assets (Section 24)
  • Transport allowances in case of a differently-abled individual.
  • Conveyance allowance acquired to meet the conveyance expenditure incurred as part of the employment.
  • Any repayment received to satisfy the cost of travel on tour or transfer.

Income Tax Exemptions under Old Tax Regime

Save Rs.1.5 Lakhs to your Taxable Income under Sections 80C, 80CCC, and 80CCD

  1. Financial Protection Instruments
  • Term Insurance
  • Life Insurance
  1. Retirement and Long-Term Objectives
  1. Investment for Child’s Future:
  • Sukanya Samriddhi Scheme (SSS)
  • Child Plans from Insurance Providers
  1. Wealth Protection
  • National Savings Certificate (NSC)
  • Tax Saving Deposits – 5 Year
  • Life Insurance endowment and Money-again plans

Income tax above 15 lakh for salary

An additional tax benefit is available for contributions of up to Rs 50,000 to the National Pension Scheme as per 80CCD (1B) provisions taking the overall to Rs 2 lakh. Income tax above 15 lakh However, if you fall in the higher tax bracket and are searching for tax savings for a salary above Rs.15 lakhs as you get prepared to fill your income tax go back for FY 2019-20, here are a few things to keep in mind.

If you do not put money into tax-saving system

In her finances speech, the Finance Minister explicitly stated that a person with an annual income of Rs 15 lakh not availing any deductions as per the proposed tax structure would have to pay the most effective Rs 1.95 lakh as a tax rather than Rs 2.73 lakhs in the old regime. To obtain this, you have to allow the pass of tax benefits under Chapter VI A of the Income Tax rules as well as the same old deduction of Rs 50 000 for FY 2019-20.

If you make investments up to a minimum of 1.5 lakh

If you’ve got invested in a Public Provident Fund, Employees Provident Fund, Sukanya Samriddhi Scheme, life coverage or medical insurance top class, tax-saving fixed deposits from banks or post offices, or every other provision that allows tax exemption to the track of Rs 1.5 lakh, you would still stand to lose Rs 31,200 in tax saving for salary above 15 lakhs by following the old regime tax paying technique.

If you avail deductions worth 2.5 lakh or more

If your annual salary is between 15 lakhs to 20 lakhs and you declare tax deductions worth 2.5 lakhs, you have the option to pick between both of the 2 regimes for the reason that the tax payable might be more or much less the same. However, in case you are focused on tax saving for a salary above 15 lakhs and the amount of exemption in tax sought by you is more than 2.5 lakhs, it’s far more prudent to stick to the old technique of tax computation. Let us understand this by looking at tax computation by each method for someone drawing a yearly salary of Rs 20 lakhs.

Tax Calculation for Annual Income of 20 Lakhs – Old Regime vs New Regime

Conclusion

In the Indian taxation device, a salary above 15 lakhs needs a nuanced approach. Understanding tax slabs, leveraging exemptions, and judiciously selecting among regime slabs are the bedrock of efficient plans. Exploring investment ways like PF, ELSS, and NPS under Section 80C can bolster financial savings.

Additionally, maximizing deductions and thinking about long-term period capital gains techniques in addition to high-quality procedure. By using those strategies, people can optimize their tax savings and steady their economic future.

FAQ’s:-

1. How much tax do I have to pay for 15 lakhs?

You will pay 0 tax on a salary of 15 lakhs, given you have invested in tax savings options and declared applicable deductions and exemptions. Under the old regime, your net tax payable may be 0 in case you declare exemptions and invest in tax-saving schemes.

2. How to pay 0 tax for income up to 10 lakhs?

To pay 0 tax for a salary up to 10 lakhs, you have to follow the old tax regime. Furthermore, you ought to take advantage of all the tax exemptions and invest in tax savings schemes that qualify for deductions for paying zero tax.

3. Can you save 100% on tax?

Yes, with proper tax planning, it is possible to save 100% on tax. To save on tax, you need to spend money on tax-saving alternatives and also declare for all applicable exemptions.

4. How much is the salary tax-free per the Income Tax Act?

Income as much as INR 2,50,000 is tax-free. However, the Finance minister has multiplied the restriction in the cost range of 2023. Now, under the new tax regime, a salary up to INR 3,00,000 is tax-free.

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