May 31, 2023 4,125 4 mins read
Taxes are a huge factor for anyone who wants to make more money than the minimum payment every month. However, many people are unaware that they can maximise their tax savings with a salary of 15LPA in India. Here is how you can do it!
How to Make Effective Tax Savings?
One of the most important ways to save tax is by making effective tax savings. There are a number of different ways that you can make effective tax savings, and each one depends on your individual circ*mstances. One way to make effective tax savings is to make use of your salary deductions. You can claim a number of different deductions on your tax return, including those for salary, pension contributions, and childcare costs. By taking these deductions, you can reduce the amount of income that you have to pay taxes on.
You can also make use of special savings accounts that are designed to help you save money for retirement. These accounts allow you to withdraw money without paying taxes on the interest that you earn. This can be a great way to save money for your future retirement needs. Finally, make use of estate planning services to help you plan for your future estate taxes. This will help you avoid paying high estate taxes when you die, which could be a costly burden for your loved ones.
Taxable Income Levels in India
In India, Income tax return is levied at different levels depending on the taxpayer’s taxable income. Taxable income generally refers to all sources of income that are subject to taxation in India. This includes both earned and unearned income.
There are three main taxable income levels in India:
The first taxable income level is called the exemption limit. This limit applies to individuals who have an annual taxable income of ₹2 lakhs or less. This limit is increased to ₹5 lakhs for individuals who are student loan borrowers.
The second taxable income level is called the basic exemption limit. This limit applies to individuals who have an annual taxable income of ₹3-5 lakhs. The amount of your basic exemption limit is based on your family’s total annual income, including both earned and unearned income.
The third and highest taxable income level is called the high-income threshold. This limit applies to individuals who have an annual taxable income of more than ₹5 lakhs. The amount of your high-income threshold is based on your family’s total annual income, including both earned and unearned income.
Calculating Salary for Income Tax
The Income Tax Department in India: https://www.incometax.gov.in/iec/foportal/ relies heavily upon the declared income of an individual to calculate taxes. This is because the department does not have access to a person’s bank account or other assets.
To calculate an individual’s salary for income tax, the Indian government requires that the individual provide their employer with their gross salary. This is the amount of money that the employee receives before deductions are made. The salary must be stated in Indian rupees (₹) and should be quoted as an annual salary rather than an hourly wage.
The Income Tax Department in India also requires that all employees declare any bonuses or other forms of income that they receive. These payments must also be stated in Indian rupees and quoted as an annual income instead of an hourly income. If an employee does not receive any bonus or other form of income, they may choose to leave this information blank on their tax return form.
It is important to consult with a qualified tax advisor such as Vakilsearch if you are unsure how to report your salary for income tax in India. They can help you to ensure that you are declaring all of your income correctly and that you are paying the correct amount of taxes.
Simple Savings Strategies
To start with, the initial step is to establish a budget and adhere to it. By keeping track of your expenses, you can identify areas where you can cut back and save money. This data can then be utilized to calculate your tax liability.
Another effective saving strategy is to make regular contributions to your employer-sponsored retirement account (ESRA). These consistent contributions can be deducted from your taxable income. You can also save through flexible savings schemes provided by various banks and financial institutions, which enable you to invest in a range of securities without any upfront charges.
Lastly, it’s crucial to file your tax returns on time every year to ensure that all taxes are paid promptly. By following these simple tips, you can efficiently save tax money and enjoy all the benefits of earning an income in India.
Tips to Prevent Some Costly Mistakes
If you are earning a salary in India and want to save tax, there are a few things you should keep in mind. First, make sure you are including all of your income on your tax return. This includes wages, salary, tips, bonuses, and any other income you receive from your job.
Second, make sure you are filing the correct tax bracket. In order to find out your tax bracket, consult with a qualified tax advisor.
Third, try to avoid making any costly mistakes when filing your taxes. This includes overpaying taxes or not claiming all of the deductions and credits that you are entitled to. A qualified tax advisor can help you file your taxes correctly and minimize your taxes liability.
Conclusion
Salaries in India range greatly depending on the industry and company size, with an average salary of approximately ₹2.5 lakhs per annum (LPA). Given this high variability, it can be difficult to optimise one’s tax saving potential without professional help. One common mistake that people make is underestimating their taxable income by declaring too little income or inflating their expenses.
In order to maximise your tax savings opportunities and reduce your overall tax burden, you need to consult a qualified accountant/ service provider such as Vakilsearch who will be able to understand your individual situation and advise you accordingly on which deductions and exemptions are available to you.
Also, Read:
FAQs
Affluent Indians earn Rs 15 LPA on average: Visa. The average annual household income of India's affluent is Rs 15 lakhs while the average age is 34 years, younger than in most Asia Pacific markets, the Visa Affluent Study said.
How much tax is deducted from 15 LPA India? ›
How to calculate income tax on salary above 15 lakhs? Tax calculation example
| Gross Salary | 15,00,000 |
|---|
| Professional Tax | (2200) |
| Taxable Salary Income | 13,03,800 |
| Less: Deductions | |
| 80C (Refer Note below) | (1,50,000) |
12 more rowsApr 13, 2023
50 % of basic salary plus dearness allowance if staying in metro cities (Mumbai, Kolkata, Delhi or Chennai) or 40 % of basic salary plus dearness allowance if staying in non-metro cities.
How can I reduce my salary tax in India? ›
The below-mentioned investments/payments reduce your taxable income by Rs 1.5 lakh.
- PPF (Public Provident Fund)
- Tax Saving FDs.
- ELSS (Equity Linked Savings Scheme)
- NSC (National Saving Certificate)
- Life Insurance Premium.
- NPS (National Pension Scheme)
- Home Loan Repayment.
- Payment of tuition fees.
As of 2022, the average salary in India is around Rs. 5.7 lakh per annum (INR 47500 per month). However, this can vary greatly depending on various factors, such as industry, job type, location, and experience.
What is handsome salary in India? ›
Rs 15 lakh to Rs 30 lakh per year (Rs 1.25 lakh to Rs 2.5 lakh per month) Men having an annual salary income of between Rs 15 lakh to Rs 30 lakh are 130% more desired for marriage than other men.
How can I reduce my taxable income? ›
How Can I Reduce My Taxable Income? There are a few methods that you can use to reduce your taxable income. These include contributing to an employee contribution plan, such as a 401(k), contributing to a health savings account (HSA) or a flexible spending account (FSA), and contributing to a traditional IRA.
How much tax will I pay on 20 LPA in India? ›
New Tax Regime (From FY 23-24)
| Gross Salary (A) | ₹20,00,000 |
|---|
| ₹9,00,001 – ₹12,00,000 (15%) | ₹45,000 |
| ₹12,00,001 – ₹15,00,000 (20%) | ₹60,000 |
| Above ₹15,00,000 (30%) | ₹1,35,000 |
| Total Tax Payable | ₹2,85,000 |
8 more rowsMar 1, 2023
Reaching 13 Lacs in 7 years means that you are earning above average.
How can I save 100% tax in India? ›
Investing money in tax-saving instruments
- Public Provident Fund.
- National Pension Scheme.
- Premium Paid for Life Insurance policy.
- National Savings Certificate.
- Equity Linked Savings Scheme.
- Home loan's principal amount.
- Fixed deposit for five years.
- Sukanya Samariddhi account.
Keep detailed records and gather supporting documents for your claims. Utilize tax-saving investments: Invest in tax-saving instruments such as Public Provident Fund (PPF), National Savings Certificate (NSC), Tax-saving Fixed Deposits (FD), and Equity Linked Savings Schemes (ELSS).
How can I save 30 percent tax in India? ›
Section 80C
- Life insurance premium paid (up to 10% of the sum assured)
- Home loan principal repayment.
- Stamp duty and registration charges paid for a house property.
- 5-year fixed deposits.
- Equity Linked Saving Scheme (ELSS) of mutual funds.
- Public Provident Fund (PPF)
- Employees' Provident Fund (EPF) contributions.
As individual claiming section 80C deduction can save tax of Rs 46,800 (including cess). To claim section 80C deduction, one must invest in any of the specified instruments such as Employees' Provident Fund (EPF), Public Provident Fund (PPF), tax-saving fixed deposit, ELSS mutual funds etc.
How can I lower my taxable income 2023? ›
9 Ways to Reduce Your Taxable Income
- Contribute to a 401(k) or Traditional IRA.
- Enroll in Your Employee Stock Purchasing Program.
- Deduct Business Expenses.
- If You Can, Invest in Qualified Opportunity Funds.
- Donate Stocks Through Donor-Advised Funds.
- Sell Poor-Performing Stocks.
- Deduct Student Loan Interest.
Your taxable income is a sum of basic salary paid by the employer, wages, bonus, income from investments or any other sources. Income tax for salaried employees is calculated based on pre-determined tax liability as per slabs.
What is considered a very high salary in India? ›
You can get hold of the best jobs in India after completing this course. Data Scientist is one of the highest paying jobs in India, with the national average salary for a Data Scientist being ₹11,00,000. Experienced data scientists can earn as high as 60-70 lakhs per annum.
What is a good salary in India in USD? ›
Salary range. India's average salary range extends from 8,080 INR per month (98 USD) to 143,000 INR per month (1,734 USD).
What is the average salary of an Indian in the US? ›
According to the latest US Census data, the Indians now have an average household earning of $123,700, i.e a little over ₹1 crore, PTI reported. The median earnings of the Indians there is nearly double the nationwide average of $63,922.
How much money is enough to live a good life in India? ›
Cost of living depends on what you do and where you live in the India. Basic need living costs such as food, water and shelter costs you around 15000 to 20000 INR.
What is the average LPA in India? ›
The average lpa salary in India is ₹ 600,000 per year or ₹ 240 per hour.
Young professionals tell how they manage with the salary that has been a benchmark for a successful career. The ₹1 lakh salary gives enough disposable income for young earners to invest.
How much tax you can save in India? ›
What is the maximum tax saving in India? Under Section 80C of the Income Tax Act, an individual can claim maximum tax savings of Rs 1.5 lakhs per financial year through deductions.
What are the 2023 tax brackets? ›
The 2023 tax year—the return you'll file in 2024—will have the same seven federal income tax brackets as the 2022-2023 season: 10%, 12%, 22%, 24%, 32%, 35% and 37%. Your filing status and taxable income, including wages, will determine the bracket you're in.
What is the take home salary for 20 lakhs in India? ›
Reality about Placements CTC 100% Variable.
| Band | CTC (Yearly) | In Hand Salary after Tax |
|---|
| B | 20 lakh | 1,15,000 per month |
| C | 15 lakh | 95,000 per month |
| C | 12 lakh | 82,000 per month |
| D | 10 lakh | 63,000 per month |
4 more rowsIf you make ₹ 1,200,000 a year living in India, you will be taxed ₹ 323,400. That means that your net pay will be ₹ 876,600 per year, or ₹ 73,050 per month. Your average tax rate is 27.0% and your marginal tax rate is 43.2%.
Is 18 lakhs a good salary in India? ›
It depends on what do you mean by “good” and “experience”. There are factors such as if you are staying single or have dependents, your expenditure. However, in general 18–20 LPA is a good salary in India.
Is 1 crore salary common in India? ›
Income tax data shows that only 131,000 Indians earned above ₹1 crore annually in FY21, roughly 0.01% of the country's population. A 2020 Bloomberg report said India's top-paid 1% earn ₹55 lakh and above. To be sure, many businesses and self-employed individuals under-report incomes to avoid higher taxes.
Is 15 lakhs a good salary in mumbai? ›
15 lac per annum package is good for person to take a flat in mumbai, navi mumbai and thane along with monthly cost of living.
Is 50 lakhs per month a good salary in India? ›
If you earn more than 50 lacs a year you're in the top 0.3% of India. Above 25 lacs, you're in the top 1.2% of India. Only 3.2% of Indians earn above 15 lacs a year.
How can I save tax on salary above 1 crore in India? ›
- A Standard deduction of Rs.50,000.
- Public Provident Fund.
- Equity Linked Saving Scheme.
- Life and Health Insurance Premium.
- Children Tuition Fees.
6 Ways to Save Income Tax for FY 2023-24
- Buy a home loan and enjoy tax benefits under Section 80C.
- Buy a health insurance policy.
- Park your money in government schemes.
- Buy life insurance plans.
- Investment options under Section 80C.
- Other Tax Saving options beyond Section 80C.
Highest surcharge shall be 25 per cent for income above Rs 2 crore.
Who gives most income tax in India? ›
Akshay Kumar was the highest taxpayer in India for 2022. According to the Income Tax department, he paid an income tax of Rs. 29.5 crore, the highest among individuals in India last year.
How can I avoid taxes on a large sum of money in India? ›
Best Ways to Save Tax for Income Tax
Public Provident Fund (PPF): A 15-year lock-in period applies to these government-backed investments. After 7 years, you can partially withdraw your funds and earn 8% interest. Employee Provident Fund (EPF): Employees with salaries participate in this retirement plan.
How do high income earners maximize tax returns? ›
Tax Saving Strategies for High-Income Earners: Change the Character of Your Income
- Convert your SIMPLE, SEP, or traditional IRA to a Roth IRA. ...
- If you own a business, you may want to restructure your business entity, particularly if you are operating as a sole proprietor, LLC, or an S-Corp. ...
- Invest in tax-exempt bonds.
Invest in Tax-Saving Instruments
Under Section 80C of the Income Tax Act, you can claim a deduction of up to ₹1.5 lakhs by investing in various tax-saving instruments such as Public Provident Fund (PPF), National Savings Certificate (NSC), Equity Linked Savings Scheme (ELSS), and more.
How to save tax for salary above 50 lakhs in India? ›
By investing in tax-saving instruments, utilizing Section 80D, maximising home loan benefits, making use of LTA, opting for NPS, donating to charity, availing HRA benefits, planning your capital gains, opting for a lower tax regime, and consulting a tax expert, you can save tax and achieve your financial goals.
How to save tax in India for 12 lakhs salary? ›
Deductions
- Investments and payments under Section 80C, 80CCC, 80CCD(1.
- Insurance premium of health policy under Section 80D.
- Deductions on interest payment for loans taken for higher studies under Section 80E.
- Interest payment on home loan under Section 80EE.
- Donations to a charitable organisation under Section 80G.
There are various ways to save tax for those earning above ₹20 lakhs, including investing in tax-saving mutual funds, PPF, NPS, health insurance, donations to charity, home loan, rent paid, education loan, and offsetting expenses incurred on generating income from investments.
How can I effectively save tax with salary of over 20 LPA in India? ›
Children's Education fees: (Rs 25,000 to Rs 1 lakh) ELSS mutual funds– Rs 60,000 (Investment: Rs 500 per month SIP, Returns- 12% CAGR, Lock-in-period: 3 years) ULIP or endowment plant- Rs 12,000 premium. Term plan insurance- Rs 12,000 premium (Around Rs 1 Crore cover)
Term plan insurance: Rs 12,000 premium (Around Rs 1 Crore cover) ULIP or endowment plant: Rs 12,000 premium. ELSS mutual funds: Rs 60,000 (Investment: Rs 500 per month SIP, Returns- 12% CAGR, Lock-in-period: 3 years) Children's Education fees: (Rs 25,000 to Rs 1 lakh)
How to get the biggest tax refund in 2023? ›
6 Ways to Get a Bigger Tax Refund
- Try itemizing your deductions.
- Double check your filing status.
- Make a retirement contribution.
- Claim tax credits.
- Contribute to your health savings account.
- Work with a tax professional.
There are a number of ways you can go about tax planning, but it primarily involves three basic methods: reducing your overall income, increasing your number of tax deductions throughout the year, and taking advantage of certain tax credits.
How do I get a $10000 tax refund 2023? ›
How to Get the Biggest Tax Refund in 2023
- Select the right filing status.
- Don't overlook dependent care expenses.
- Itemize deductions when possible.
- Contribute to a traditional IRA.
- Max out contributions to a health savings account.
- Claim a credit for energy-efficient home improvements.
- Consult with a new accountant.
50 % of basic salary plus dearness allowance if staying in metro cities (Mumbai, Kolkata, Delhi or Chennai) or 40 % of basic salary plus dearness allowance if staying in non-metro cities.
How much of Internet bill is tax deductible? ›
For example, pretend you use your internet for client communications 40% of the time, and for Netflix, TikTok, and online shopping the other 60% of the time. You can only write off 40% of your internet bill.
What are tax exemptions in India for salaried employees? ›
Income Tax Slabs for Salaried Individuals and HUF for FY 2022-23 - New Tax Regime
| Income Tax Slabs | Rate of Taxation |
|---|
| Up to ₹2,50,000 | Nil |
| Between ₹2,50,000 and ₹5,00,000 | 5% of your total income that exceeds ₹3,00,000 |
| Between ₹5,00,000 and ₹7,00,000 | ₹12,500 + 10% of your total income that exceeds ₹5,00,000 |
4 more rowsJun 9, 2023
An Entry Level LPA with less than three years of experience earns an average salary of ₹2.3 Lakhs per year. A mid-career LPA with 4-9 years of experience earns an average salary of ₹3.1 Lakhs per year, while an experienced LPA with 10-20 years of experience earns an average salary of ₹3.1 Lakhs per year.
How much LPA is good in India? ›
The average lpa salary in India is ₹ 600,000 per year or ₹ 240 per hour.
Is 15 LPA a good salary in Bangalore? ›
But your question is like is it sufficient to maintain a good standard of living then Yes it is more than sufficient.
The estimated total pay for a 16 LPA is ₹1,279,148 per year in the India area, with an average salary of ₹1,150,000 per year. These numbers represent the median, which is the midpoint of the ranges from our proprietary Total Pay Estimate model and based on salaries collected from our users.
How much does LPA earn in USA? ›
As of Jun 7, 2023, the average annual pay for a Lpa Inc Lpa in the United States is $38,095 a year.
Is 80.2 LPA salary enough to survive in Gurugram? ›
Recently, a woman on Twitter questioned whether an 80.2 LPA salary was sufficient for "surviving" in Gurugram. The tweet was intended as a jab at Quora users who pose such queries. In other words, the question is completely sarcastic and has nothing to do with reality.
What is a good salary in 2023? ›
If a worker works 52 weeks a year, this equates to a national annual salary of $51,168, up 5.1 per cent from the previous year. Any sum beyond that should be regarded as a good salary; however, this is not always the case.
Is 50 lakhs a good salary in India? ›
If you earn more than 50 lacs a year you're in the top 0.3% of India. Above 25 lacs, you're in the top 1.2% of India. Only 3.2% of Indians earn above 15 lacs a year.
What is India's average annual income? ›
The average salary in India is below ₹50,000, reveals a latest report. On the occasion of International Labours Day, the World of Statistics has released data on average monthly salaries around the world.
How much tax for 16 LPA in India? ›
Tax rate for individuals (below 60 years) and HUFs:
| Tax Slabs | Tax Rates |
|---|
| Income up to Rs.2.5 lakhs | NIL |
| Income between Rs.2.5 lakhs and Rs.5 lakhs | 10% of amount exceeding Rs.2.5 lakhs |
| Income between Rs.5 lakhs to Rs.10 lakhs | 20% of amount exceeding Rs.5 lakhs |
| Income above Rs.10 lakhs | 30% of amount exceeding Rs.10 lakhs |
Some commonly searched salaries
| Annual Salary (LPA - lakh per annum) | Monthly Salary Range |
|---|
| 14 LPA in hand salary | 93,100 to 1,03,800 |
| 15 LPA in hand salary | 98,600 to 1,10,500 |
| 16 LPA in hand salary | 1,04,100 to 1,17,100 |
| 16.5 LPA in hand salary | 1,06,900 to 1,20,500 |
46 more rowsSimilarly, the income bracket above Rs 10 lakh per annum, as a proportion of total taxpayers, has grown from 5.6% in FY15 to 12.8% in FY21. The largest single-year jump in this category was seen between FY20 and FY21, from 54 lakh taxpayers to 81 lakh taxpayers in the above Rs 10 lakh per annum income bracket.
What is the in hand salary of 50 LPA in India? ›
What will be take home salary for 50 lakhs? So if your annual CTC is Rs 50 lakh, you can expect to get an annual take home of 35 lakh or Rs 2.9 lakh per month.”
