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Earning over ₹15 lakhs? Want to know how to reduce your tax burden with strategic planning? Read more!
Earning over ₹15 lakhs annually? That’s a significant milestone, but it also brings considerable financial obligations. A proper tax plan for ₹15 lakhs salary is essential to keep your tax burden manageable.
The Indian tax system can seem complex. Wondering which route to take? This guide simplifies the options for you. To learn more about efficient tax planning for a ₹15 lakh salary, continue reading our detailed blog.
Understand the tax slabs and rates
To plan tax for ₹15 lakhs salary in India, start by exploring the tax systems in India. There are two main options to consider:
- Old regime: This includes various allowances and exemptions to help reduce your taxable income.
- New regime: It offers lower rates but does away with most exemptions, making it simpler.
In the February short-term budget, the state has kept the tax brackets unchanged for the fiscal 24-25. Your choice between these systems should be based on your financial situation and the allowances you are eligible for.
However, the default option is the latest regime. Suppose, if you prefer the old framework, notify your employer. Plus, note that if you haven’t completed filing tax returns by July 31, the new regime will be automatically considered.
Here is a summary of the income tax structure for salaried individuals and Hindu Undivided Families (HUFs) under the age of 60.
| Tax rates for people under 60 years of age | |||
| Old Tax Regime | New Tax Regime u/s 115BAC | ||
| Income Tax Slab (₹) | Income Tax Rate | Income Tax Slab (₹) | Income Tax Rate |
| Up to 2.5 lakh | Nil | Up to 3 lakh | Nil |
| Above 2.5 lakh to 5 lakh | 5% above 2.5 lakh | Above 3 lakh to 6 lakh | 5% above 3 lakh |
| Above 5 lakh to 10 lakh | 12,500 + 20% above 5 lakh | Above 6 lakh to 9 lakh | 15,000 + 10% above 6 lakh |
| Above 10 lakh | 1,12,500 + 30% above 10 lakh | Above 9 lakh to 12 lakh | 45,000 + 15% above 9,00,000 |
| Above 12 lakh to 15 lakh | 90,000 + 20% above 12 lakh | ||
| Above 15 lakh | 1.5 lakh + 30% above 15 lakh | ||
Source: Income Tax Department
General tax saving provisions
For those confused with income tax for ₹15 lakhs salary in India, strategic tax planning is non-negotiable. Understanding available exemptions & deductions is key to optimising tax liability.
These arrangements can significantly minimise your taxable amount. Applying them smartly makes sure you owe less to the government.
Here are some common options available:
Exemptions (Old tax regime)
House Rent Allowance or HRA
If you’re staying in a rental house, HRA is eligible. The exemption depends on:
- Actual allowance received.
- Rent paid (-)10% of your salary.
- 50% of your basic pay if you live in a metro city (40% if non-metro).
Make sure you have all your rent receipts to avail of this benefit.
Leave Travel Allowance/ LTA
Your travel expenses (not accommodation) can be claimed twice in a block of four years.
Children’s Education Allowance or CEA
This allowance offers tax relief of ₹100 per month per child for up to two children. Plus, ₹300 per month per child can be claimed for hostel expenses. It can add up to ₹4.8K and ₹7.2K annually.
Standard deduction
Through this, employees can enjoy a 50,000/- reduction from their total receipt.
Deductions (Old tax regime)
80C
Under this provision you can deduct up to ₹1.5 lakhs, via options like public provident fund, life insurance premiums and more.
80D
Health insurance premiums can be deducted up to:
- ₹25k for self, spouse, and dependent children.
- An additional ₹25000 for parents (Doubles if they are senior citizens).
24
Interest on home loans is deductible up to ₹2 lakhs for self-occupied properties. For rented properties, the entire interest amount is deductible, providing significant tax relief for homeowners.
80E
Likewise, interest incurred for education loans in the case of higher studies can be claimed for up to eight years. This applies for self, your spouse, children, or a student for whom you are a legal guardian.
80G
This applies to donations to specified funds and charitable institutions. Depending on the organisation, half or full amount of the donation amount can be claimed.
80CCD(1B)
An additional deduction of ₹50k is available for contributions to the National Pension System i.e, the NPS. This is above the ₹1.5 lakh limit u/s 80C, encouraging retirement savings.
Deductions (New Tax Regime)
Standard deduction
A flat reduction of ₹50,000 similar to the older system.
80CCD(2)
Employer contributions to NPS are deductible under this section. It’s a beneficial way to reduce taxable income while saving for retirement.
80CCH
Investments in the Agniveer Corpus Fund are deductible, promoting long-term savings.
57(iia)
Family pension received is deductible, providing relief to beneficiaries of deceased employees.
Exemptions on voluntary retirement, gratuity, and leave encashment
U/s 10(10C),(10) & (10AA), amounts received under voluntary retirement, gratuity, and leave encashment are exempt up to certain limits.
Interest on home loan for let-out property
Interest paid on a home loan for a let-out property is deductible, easing the tax burden for property owners.
Transport allowance for specially-abled persons
This special allowance is deductible, recognising their unique needs.
Conveyance Allowance
Allowance received to meet conveyance expenses incurred as part of employment is deductible.
Compensation for travel on tour or transfer
Compensation received for travel on tours or transfers is deductible. It’s a lesser-known but valuable benefit.
Tax plan for ₹15 lakh salary
Utilising the mentioned investment options can help you significantly lower your financial burden, depending on the benefits you get from either the old or new system. Here’s an example demonstrating how each system is calculated for income tax for ₹15 lakhs per annum.
| Details | Old system (₹) | New system (₹) |
| Annual earnings | 15L | 15L |
| Exemption | ||
| HRA | 1L | – |
| LTA | 20,000 | |
| Deductions | ||
| Standard deduction | 50,000 | 50,000 |
| Profession tax | 2,400 | |
| Salary earnings | 13,27,600 | 14.5L |
| Chapter VI-A deductions | ||
| Section 80C | 1.5L | |
| Section 80D | 25,000 | – |
| NPS contributions | 50,000 | – |
| Taxable earnings | 11,02,000 | 14.5L |
| Tax calculation | ||
| 5% on ₹2.5L – ₹5L=12,500 | 5% on ₹3L – ₹6L= 15,000 | |
| 10% on ₹5L – ₹7.5L= 25000 | 10% on ₹6L – ₹9L=30,000 | |
| 15% on ₹7.5L – ₹10L= 37500 | 15% on ₹9L – ₹12L=45,000 | |
| 20% on ₹10L – ₹12.5L= 20,400 | 20% on ₹12L – ₹15L=60,000 | |
| Total tax | ≈95000 | 1,40,000 |
| Cess @ 4% | 3800 | 6,000 |
| Total liability | 98,800 | 1,45,600 |
These are only hypothetical samples; reality may differ depending on your unique financial circumstances. Choose the tax regime that best minimises your liability.
Conclusion
Handling tax for ₹15 lakhs per annum calls for a strategic approach. Therefore, become familiar with both tax systems in order to maximise the advantages that are offered. Go through your financial situation to identify which option suits you best.
DISCLAIMER: This article is not meant to be giving financial advice. Please seek a registered financial advisor for any investments.
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