People in the high-income bracket of Rs 15 lakh+ salary 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.
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 only available in the old regime.
You can also use the the old vs new tax regime calculator for better understanding.
| Annual Income | Old Tax Regime | New Tax Regime |
| Up to Rs 2.5 lakhs | Nil | Nil |
| >2.5 lakhs – Rs 5 lakhs | 5% (however full rebate) | 5% |
| >5 lakhs – Rs 7.5 lakhs | 20% + Rs 12,500 | 10% + Rs 12,500 |
| >7.5 lakhs – Rs 10 lakhs | 20% + Rs 12,500 | 15% + Rs 37,500 |
| >10 lakhs – Rs 12.5 lakhs | 30% + Rs 1,12,500 | 20% + Rs 75,000 |
| >12.5 lakhs – Rs 15 lakhs | 30% + Rs 1,12,500 | 25% + Rs 1,25,000 |
| >15 lakhs and above | 30% + Rs 1,12,500 | 30% + 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 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 exempt for 2 trips in 4 years under 10(5). Read more |
| Mobile/ Internet reimbursem*nt | Exempt if: – used predominantly for office purposes – proofs/bills submitted |
| Children Education and Hostel allowance | Rs 4800 per child (max 2 children) |
| Food | Rs 50 per meal (max 2 meals a day) Annual=Rs 31,200 (50*2*26 days*12 months) |
| Standard Deduction | Rs 50,000 (Will be given to all without any restrictions) |
| 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:
| Payinghealthinsurance policypremium (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 aneducation 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 |
| Donatingto charity (Section 80G) | 50% or 100% of the eligible amount |
| Investingin taxsaving 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 totreatdisabled 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 |
| Deductionson homeloanpayments | Principal amount: Upto Rs 1.5 lakhs u/s 80C Interest amount: Upto Rs 2 lakhs paid u/s 24b |
| Maturityamount of a LifeInsurancePolicy | 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 Salary | 15,00,000 |
| Less: | |
| HRA | (1,25,000) |
| LTA | (20,000) |
| Reimbursem*nts | (20,000) |
| Children education and hostel allowance | (9,000) |
| Standard Deduction | (40,000) |
| Professional Tax | (2200) |
| Taxable Salary Income | 13,03,800 |
| Less: Deductions | |
| 80C (Refer Note below) | (1,50,000) |
| 80D | (50,000) |
| 80E | (25,000) |
| Net Taxable Income | 10,78,800 |
| Tax on the above income | 1,36,140 |
| Rebate u/s 87A | NA |
| Total Tax | 1,36,140 + 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:
- ELSS mutual funds- Rs 60,000 (Investment: Rs 500 per month SIP, Returns- 12% CAGR, Lock-in-period: 3 years)
- Term plan insurance- Rs 12,000 premium (Around Rs 1 Crore cover)
- ULIP or endowment plant- 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)
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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