4 min read
Updated on Sep 19, 2023
In India citizens are expected to pay tax as per the tax slab that they belong to. However, there are ways to get tax deductions to pay no tax or zero tax on your income by means of investment plans in various tax-saving instruments.
If you are looking for such ways to pay no tax on 10 lakh income and beyond, don’t miss out on optimization of salary. In this post, we are offering various tips on tax planning by means of salary optimization to guide you better. But before that let’s look at the income tax slabs under the new and old income tax regime.
Take a look at the new and old tax regimes for tax slabs so that you can choose the best one between the two. Here we are offering the various tax slabs under both the regimes for better understanding.
|Yearly Income||Tax Slab As Per Old Tax Regime||Tax Slab As Per New Tax Regime|
|Up to INR 2.5 lakh||NIL||NIL|
|INR 2.5 lakh to INR 5 lakh||5%||5%|
|INR 5 lakh – INR 7.5 lakh||20% + Rs. 12,500||10% + Rs.12,500|
|INR 7.5 lakh – INR 10 lakh||20% + Rs. 12,500||15% + Rs.37,500|
|INR 10 lakh – INR 12.5 lakh||30% + Rs 1,12,500||20% + Rs.75,000|
|INR 12.5 lakh – INR 15 lakh||30% + Rs 1,12,500||25% + Rs.1,25,000|
|INR 15 lakh and above||30% + Rs 1,12,500||30% + Rs.1,87,500|
You may note here that the new tax regime does not provide any deductions. It is only the Old Tax Regime that allows deductions as discussed in the post below.
If you want to know how to save tax on 10 lakh salary, you should first understand your Salary Structure to be able to save more. There are various grants and tax exemptions allowed under a salary. The taxable income is the amount of salary that doesn’t come under the purview of any exemptions.
Hence, your Salary minus Exemptions is equal to Taxable Salary Income. Similarly, Taxable Salary Income minus Deductions is equal to Net taxable income. Hence, tax savings can be capitalized on through various deductions and exemptions (available under the old tax regime).
Various Salary Component that comes under Tax Exemptions include:
Read More: How to Save or Reduce TDS On Salary
Let us understand income tax above 10 lakh with an example as follows:
|Salary (Gross)||INR 10, 00, 000|
|Exemptions: (rough estimation)|
|Education (of children)||INR 9,600|
|Standard Deductions||INR 50,000|
|Professional Tax||INR 2,400|
|Taxable Salary||INR 7,24,000|
|Under 80C||INR 1,50,000|
|Under 80D||INR 50,000|
|Under 80E||INR 25,000|
|Income for Net Tax||INR 4,99,000|
|Taxable Amount||INR 12, 450|
|Rebate Under Section 87A||INR 12, 450|
Also, you may be eligible for further deduction of claims for tax above 10 lakhs:
|Home loan deduction (Interest amount) Under section 24(b)||INR 2,00, 000|
|Home loan under section 80EEA||INR 1,50,000|
|Savings in NPS Under section 80CCD(1B)||INR 50,000|
You may here note that it is not necessary for everyone to possess a home loan. Moreover, many people may not show interest in investments as well. However, these tax saving investments can be used to deduct INR 1, 50,000 from your salary under section 80C.
Below are some such tax-saving plans that you may invest in:
To Sum Up
So, now you know how to save tax on salary in India. There are many ways which can be opted to save income tax for individuals with a salary above INR 10,00,000. But, if you are not sure about tax planning, you are advised to take assistance of a professional tax advisor for maximum deductions and benefits.
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To claim tax deductions u/s 80C, one can file income tax returns in March, which is the end of a financial year.
As per Income Tax Act, an income of INR 2.5 lakh is tax-free per year. However, for senior citizens of 80 years and above, INR 5 lakh is tax-free. And those within the age group of 60 and 79 years can enjoy tax exemption of INR 3 lakh.
No, as per Section 80C of Income Tax, INR 1.5 lakh is the highest amount that can be claimed for tax deduction regardless of how many investment policies you have. However, people belonging to Hindu Undivided Family (HUF) can avail benefits of INR 1.5 lakh under section 80C individually as well as INR 1.5 lakh benefit is allowed for the Hindu Undivided Family (as a unit).
Yes, saving 100 percent on tax is possible with the help of enough investments and planning of tax.
Yes, one can invest in post office schemes to save income tax u/s 80C of IT Act.
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