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India’s Income Tax Act of 1961 allows multiple options to taxpayers for claiming deductions on income tax and lowering the tax liability. Here we are considering how to calculate and save income tax on annual salary above INR 15 lakh. The most important thing to consider in this regard is the income tax slab rates to identify the slab that is applied in your case.
Taxpayers pay income tax on their annual income as per the tax slab rates proposed by the government. At present, a taxpayer has the option of choosing between two tax slabs – the old and new income tax slab rates – since 2020. The two tax slab rates offered by the government present different approaches to the taxpayers to choose from.
On one hand, you have the old tax structure that continues to offer tax deductions and exemption. And on the other hand, there is the tax calculator new regime that allows lower tax slab rates without many deductions and exemptions at the time of computing tax liability.
|Old Income Tax Slab||New Income Tax Slab|
|Income||Tax Slab Rate (%)||Income||Tax Slab Rate (%)|
|Up to INR 2.5 Lakh||Nil||Up to INR 2.5 Lakh||Nil|
|INR 2.5 to INR 5 Lakh||5%||INR 2.5 to INR 5 Lakh||5%|
|INR 5 to INR 10 Lakh||20%||INR 5 to INR 7.5 Lakh||10%|
|Above INR 10 Lakh||30%||INR 7.5 to INR 10 Lakh||15%|
|INR 10 to INR 12.5 Lakh||20%|
|INR 12.5 to INR 15 Lakh||25%|
|Above INR 15 lakh||30%|
Additionally, 4% Cess and Surcharge (as applicable) is also required to be paid by the taxpayer.
Here are some points regarding the Tax Slab Rates – (including New and Old tax slabs)
Let us consider the taxable amount in your income as per the income tax slab structure.
|Old Income Tax Slab
Tax Slab Rate
|Old Income Tax Slab
|New Income Tax Slab
Tax Slab Rate
|New Income Tax Slab
|5%||12500||5% + 10%||12500+25000|
|30%||135000||25% + 30%||62500+0|
|Cess @4%||9900||Cess @4%||7500|
|Tax Liability||257400||Tax Liability||195000|
Let us now consider some tax saving options for individuals with annual salary above INR 15 lakh
As the income of individuals grows up, so do their tax liabilities. However, there are various options to lower the tax liabilities on salaries by means of various exemptions and deductions as per the Income Tax Act of 1961, India.
Hence, the tax saving products are much in demand among taxpayers. They not just help you save tax, but secure your financial future as well. Here are some options which can be used to reduce tax liability of people with income above INR 15 lakh.
A taxpayer can save up to INR 1.5 lakh on his/her taxable income under various Income Tax sections like 80C, 80CCC, and 80CCD. Below is a list of some such tax saving instruments:
With all the above tax saving tools, the tax liability can be reduced to a substantial level for a person with INR 15 lakh and above salary.
Know More: Old vs New Income Tax Slab
Let us understand income tax above 15 lakh with an example as follows:
|Salary (Gross)||INR 15, 00, 000|
|Education (of children)||INR 9,000|
|Standard Deductions||INR 40,000|
|Professional Tax||INR 2,200|
|Taxable Salary||INR 13,03,800|
|Under 80C||INR 1,50,000|
|Under 80D||INR 50,000|
|Under 80E||INR 25,000|
|Income for Net Tax||INR 10,78,800|
|Taxable Amount||INR 1.36, 140|
|Rebate Under Section 87A||Nil|
|Total Tax||1,36,140 + Cess 4%|
Also, you may claim the below deductions in addition:
|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|
To Sum Up
As discussed above, there are numerous ways to calculate your income tax on salary above 15 lakh for FY 2022-23. You can use many tax saving products and instruments to save tax as per the tax calculator old regime. However, you may note that the tax policies of the government keep changing frequently. Hence, it is important to stay updated with the latest in the income tax section at the time of tax planning.
Further, a taxpayer can use the new tax regime calculator to find out his/her taxable income and the tax they would be paying on their income.
Yes, switching between income tax slab structures is possible and it can be done on a yearly basis as per the need of the taxpayer. Yes, your employer is responsible for TDS application on salary and can apply the applicable rates upon your intimation. Hence, it is important to intimate them. If you use the tax saving instruments wisely, you can pay the minimum amount on your 15 lakh salary package. Refer to the article above to get a better idea. For INR 15 lakh and above salaries you can reduce the taxable income by applying various tax saving instruments. Some of them include: Yes, if you are a taxpayer with a salaried income, you can change the income tax regime at the time of filing a revised ITR.
FAQs on Income Tax Above 15 Lakh
Can you switch from the old income tax slab structure to the new one and vice versa on a year-to-year basis?
Shall I inform my employer about choosing the new tax slab rates for TDS application on my salary?
How much tax do I pay on 15 Lakh Per Annum?
How to avoid tax for 15 lakhs salary?
Unit Linked Insurance Plans (ULIPs)
Pension or Annuity Plans from Life Insurance Companies
Public Provident Fund (PPF)
Employee Provident Fund (EPF)
Senior Citizen Savings Schemes
Can I change my tax regime?
Yes, switching between income tax slab structures is possible and it can be done on a yearly basis as per the need of the taxpayer.
Yes, your employer is responsible for TDS application on salary and can apply the applicable rates upon your intimation. Hence, it is important to intimate them.
If you use the tax saving instruments wisely, you can pay the minimum amount on your 15 lakh salary package. Refer to the article above to get a better idea.
For INR 15 lakh and above salaries you can reduce the taxable income by applying various tax saving instruments. Some of them include:
Yes, if you are a taxpayer with a salaried income, you can change the income tax regime at the time of filing a revised ITR.
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