How to save tax for salary above 10 Lakhs in India and pay zero tax?

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Updated on Jan 25, 2023

Based on the income tax slab, every individual has to pay tax in India. However, there are measures that can be used to pay zero tax on salary. In this post, we will discuss how to save tax on 10 lakh income or above.

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.

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Old Income Tax Regime vs. New Income Tax Regime (for tax slab):

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.

Income Tax Slabs for Individuals 

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.

Know More: Comparison Of New Income Tax Regime With Old Tax Regime

How to Save Tax for Salary above 10 lakhs?

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).

Also Read: 5 Best Government Investment Schemes and Plans

Salary Exemptions Allowed under Income Tax

Various Salary Component that comes under Tax Exemptions include:

  • Basic Salary
  • Dearness Allowance
  • HRA or House Rent Allowance
  • LTA or Leave Travel Allowance
  • Mobile/Internet Allowance
  • Education allowance for Children
  • Food Allowance
  • Standard Deductions
  • Professional Tax

Also Read: Income Tax Saving Investments Under Section 80EE, 80C, 80D

Deductions that can be Availed on Income Tax on 10 lakh Salary

  • On policy premium of your Health insurance (Under Section 80D)
  • On loan for higher education (Under Section 80E)
  • Charity Donations (Under Section 80G)
  • Investments done in tools of tax saving (Under Section 80C)
  • On disabled dependent treatment cost (Under Section 80DD)
  • Deductions are available on home loan
  • Also on the Life Insurance Policy maturity amount

Read More: How to Save or Reduce TDS On Salary

Ways to Pay Zero Income Tax on 10 Lakh Salary and Above?

Let us understand income tax above 10 lakh with an example as follows:

Salary (Gross) INR 10, 00, 000
Exemptions: (rough estimation)
HRA INR 1,50,000
LTA INR 40,000
Reimbursements INR 24,000
Education (of children) INR 9,600
Standard Deductions INR 50,000
Professional Tax INR 2,400
Taxable Salary INR 7,24,000
Deductions:
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
Total Tax 0

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.

Know More: Top Investment Options for Investing ₹1 Lakh for 6 Months

Best Tax Saving Plans in India

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.

Found this post informational? Browse PayBima Blogs to read interesting posts related to Health Insurance, Car Insurance, Bike Insurance, Term Life Insurance and Investment section. You can visit PayBima to Buy Insurance Online.

 

 

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FAQs on Save Tax For Salary Above 10 Lakh

How Can I claim deductions under the Income Tax Section 80C?

To claim tax deductions u/s 80C, one can file income tax returns in March, which is the end of a financial year. 

Till what amount the income is tax-free as per India's Income Tax Act?

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. 

Can I claim a deduction of INR 1.5 lakh for more investment policies than one?

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). 

Can you save on taxes 100 percent?

Yes, saving 100 percent on tax is possible with the help of enough investments and planning of tax.

Can we invest in post office schemes to avail tax deductions?

Yes, one can invest in post office schemes to save income tax u/s 80C of IT Act.

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Dec 15, 2022
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