Finance Minister Nirmala Sitharaman announced the new tax regime in Budget 2020, giving taxpayers the option to choose between it and the existing tax structure when they file their taxes. While your income will be taxed at lower rates as per the new tax slab, there is a catch. You will no longer be able to utilise the deductions under the Income Tax Act as earlier to lower your tax liability any further.
As per government estimates, 5.3 crore taxpayers out of a total of 5.78 crores claim tax exemptions amounting to less than ₹2 lakh. The most popular of these include investments in Public Provident Fund, life insurance plans, tax-saving, fixed deposits etc most of which fall under the ₹1.5 lakh maximum limit provided as per Section 80C.
Key Takeaways
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Now, it is essential to understand the taxation structure of the new and older regimes. It will help clarify which ones fit best for those who want to know the tax for a salary of 15 lakh in India. What might be right for others may not apply to you, so here’s a quick distinction and a comparison to help you make the right decision.
The regime for the various tax slabs for FY 2025-26 is structured in the following way:
1. Old Tax Regime:
| Income Slab | Tax Rate |
|---|---|
Up to ₹2,50,000 | Nil |
₹2,50,001 - ₹5,00,000 | 5% |
₹5,00,001 - ₹10,00,000 | 20% |
Over ₹1,00,000 | 30% |
2. New Tax Regime:
| Income Slab | Tax Rate |
|---|---|
Up to ₹4,00,000 | Nil |
₹4,00,001 to ₹8,00,000 | 5% |
₹8,00,001 to ₹12,00,000 | 10% |
₹12,00,001 to ₹16,00,000 | 15% |
₹16,00,001 to ₹20,00,000 | 20% |
₹20,00,001 to ₹24,00,000 | 25% |
Above ₹24,00,000 | 30% |
Note: Cess, the additional tax for promoting health and education, remains applicable at a rate of 4% on the total tax payable under both regimes.
The choice between the old and the new regime depends totally on your financial situation and applicable deductions and exemptions. Another thing is that you must calculate your tax liability under both regimes. It can help you save more based on your income structure and eligible deductions. However, there are some smart factors to consider when considering the preferences.
Taxpayers who have lots of deductions and exemptions to claim can greatly benefit from the old tax regime. You can claim deductions under Sections 80C, 80D, and 24(b) with the older regime.
If you do not have any deductions to claim, the newer regime offers lower tax rates, eliminating the exemptions and deductions which may be best for you. Take, for example,: a person who is earning up to ₹1.2 million can claim the standard deduction of up to ₹75,000 under the old regime, which can be a big tax saver.
An additional tax benefit is available for contributions of up to ₹50,000 to the National Pension scheme as per 80CCD(1B) provisions, taking the total to ₹2 lakh. However, if you fall in the higher tax bracket and are looking forward to tax savings for income above ₹15 lakh as you get ready to fill your income tax return for FY 2019-20, here are a few things to keep in mind:
| Old Tax Structure | Tax Calculation | New Tax Structure | Tax Calculation |
|---|---|---|---|
5% | 12,500 | 5% + 10% | 12,500 + 25,000 |
20% | 10,000 | 15% + 20% | 37,500 + 50,000 |
30% | 15,00,00 | 25% +30% | 62,500 + 0 |
Total (1+2+3) | 2,625,00 | Total (1+2+3) | 187500 |
Cess (4%) | 10,500 | Cess (4%) | 7500 |
Income Tax | 273000 | Income Tax | 195000 |
| Details | Tax Calculation (Old) | Tax Calculation (New) |
|---|---|---|
| Salary Drawn | 20,00000 | 20,00000 |
| Standard Deduction | 50,000 | 75,000 |
| Income under Salary | 19, 50000 | 19,25,000 |
| Chapter VI A Exemptions | 150000 | Nil |
| Taxable Income | 17,50000 | 20,00000 |
| Income Tax | 3, 37, 500 | 2,00,000 |
| 4% Cess | 13, 500 | 13,500 |
| Tax Payable | 3,51,000 | 3,15,500 |
The old tax regime offers various deductions and exemptions, providing more opportunities for tax savings, but it comes with higher tax rates. On the other hand, the new regime simplifies the process by offering lower tax rates, though it does not allow many of the deductions available under the old regime.
To help you make an informed decision, you can use the old vs. new tax regime calculator to compare both options and determine which one works best for you.
| Tax Slab for FY 2024-25 | Tax Rate (Old Tax Regime) | Tax Slab for FY 2025-26 | Tax Rate (New Tax Regime) |
|---|---|---|---|
Upto ₹2,50,000 | Nil | Up to ₹4 lakh | Nil |
₹2,50,001- ₹5,00,000 | 5% | ₹4 lakh - ₹8 lakh | 5% |
₹5,00,001- ₹10,00,000 | 20% | ₹8 lakh - ₹12 lakh | 10% |
₹10,00,001 and above | 30% | ₹12 lakh - ₹16 lakh | 15% |
₹16 lakh - ₹20 lakh | 20% | ||
₹20 lakh - ₹24 lakh | 25% | ||
Above ₹24 lakh | 30% |
You can save a significant amount of money by donating to a registered NGO, as a percentage of the amount donated is tax-free under section 80G of the Income Tax Act.
Clear Tax
As your income grows, so do your tax liabilities. Fortunately, Indian Income Tax Laws allow multiple ways to reduce your tax liability. One of the most effective and beneficial ways of saving your taxes is through tax-saving investments.
So, how do you save tax for a salary above ₹10 Lakhs? Here’s a list of investments that will help you save tax while you build a stronger future for your family:
| Feature | Old Tax Regime | New Tax Regime |
|---|---|---|
Tax Deductions & Exemptions | Available (e.g., 80C, HRA, NPS, etc.) | Not Available |
Tax Rates | Progressive rates with deductions | Lower flat rates without deductions |
Income Tax Slabs | ₹2.5-5L: 5%, ₹5L-10L: 20%, ₹10L+: 30% | ₹2.5L-5L: 5%, ₹5L-10L: 20%, ₹10L+: 30% |
Cess & Surcharge | 4% Health & Education Cess + Surcharge | 4% Health & Education Cess + Surcharge |
Which One iIs Better?
Old Regime: If you have multiple deductions and exemptions, the old regime might be more beneficial.
New Regime: If you don’t have significant deductions and prefer a simpler tax filing process, the new regime is a better choice.
Considering tax-saving options and personal financial goals will guide the best choice for a salary above ₹15 lakh.
From the above table, you can easily see that you can claim various deductions on your salary income. Now, you can save tax if you earn a salary of ₹15 lakh; here’s a table that will show you how to save tax for a salary above 15 lakh:
| Deductions to be Claimed | Available Deduction (₹) |
|---|---|
| Standard Deduction | 50,000 |
| Investments u/s 80C | 150,000 |
| Medical insurance premium u/s 80D | 25,000 |
| Additional Deduction on NPS* | 50,000 |
| Home loan interest | 200,000 |
| Total | 475,000 |
From above, you can see that if your income is ₹15 LPA, you can claim various deductions from taxable income up to ₹4.785 lakh.
Note: You can avail of the deductions and exemptions only if you opt for the old tax regime. These deductions and exemptions are not available in the new tax regime.
Here is the table showing how much tax do you have to pay on a ₹15 lakh income if you opt for the old and new tax regimes:
Note: The deductions and exemptions are not available in the new tax regime.
| Category | Old Tax Regime (₹) | New Tax Regime (₹) |
|---|---|---|
Income | 15,00,000 | 15,00,000 |
Deductions | 4,85,000 | 0 |
Taxable income | 10,15,000 | 15,00,000 |
Income tax | 117,000 | 188,000 |
Add: Cess | 4680 | 7500 |
Net Tax liability | 121,680 | 195,500 |
The best way to save tax for a salary above 15 lakh is to opt for the old tax regime and claim all the available deductions and exemptions on tax-saving investments.
Alternatively, you can follow the new tax regime to file your income tax return. However, once selected, you cannot claim any carried-forward losses or deductions on tax-saving investments.
Understanding and effectively utilising tax-saving strategies on salary is important for financial well-being. By exploring various tax-saving instruments, such as investments in provident funds, insurance policies, and equity-linked savings schemes, individuals can optimise their tax liabilities and secure their financial future. Moreover, being aware of the different tax slabs and thresholds ensures a strategic approach towards tax planning, enabling individuals to minimise their tax burden while maximising their savings and investments. Therefore, by staying informed and proactive in managing one's finances within the framework of tax regulations, individuals can achieve greater financial stability and security in the long run.
Under the new as well as old tax regimes, income tax on 15 lakhs salary is 30%.
No, the income tax rate under the new tax regime for 10 lakh is 15%. Under the old ta regime, it was 20%.
You can save tax on a salary above ₹15 lakh by choosing the right tax regime and using deductions like Section 80C, 80D, HRA, and standard deduction effectively.
In the old tax system, a person under 60 was exempt up to ₹2.5 lakhs, a senior citizen between the ages of 60 and 80 was exempt up to ₹3 lakhs, and a super senior citizen over 80 was exempt up to ₹5 lakhs.
For those who choose to use the new tax regime, the maximum amount free from taxes is ₹3 lacs.
The income tax department offers a baseline exemption limit that you might use to lower your tax liability. For normal taxpayers below the age of 60 years, this exemption limit is set at ₹2.5 lakh for the 2023–24 fiscal year. Thus, you may be able to deduct taxes on the first ₹2.5 lakh of your salary if you want to save income tax on ₹15 lakh salary.
The tax on a 15 lakh income depends heavily on the regime you choose and how well you plan deductions.
Under the old tax regime, the tax for 15 LPA can be significantly reduced using deductions like Section 80C, 80D, HRA, and standard deduction. With proper planning, the tax on 15 LPA is much lower than the headline slab rate.
Under the new tax regime, deductions are minimal. While slab rates are lower, the tax for 15 LPA is usually higher than a well-optimised old regime case.
A salary of ₹15 lakh falls in the highest applicable slab in both regimes, often referred to as the 15 LPA tax slab.
In the old regime, income above ₹10 lakh is taxed at 30%, but this is applied after deductions, which is why learning how to save tax in the old regime is crucial.
In the new regime, slab rates are progressive with no major exemptions, so the tax on 15 LPA is more predictable but less flexible.
Your final tax outgo is not decided by the slab alone;, it depends on how much taxable income you reduce through smart planning and tax saving after ₹1,50,000 deductions and beyond.
In most practical scenarios, it is not possible to make zero tax for 15 lakh purely through deductions if your income is entirely from salary. However, you can drastically reduce tax by:
Using Section 80C, 80D, HRA, LTA, and standard deduction
Planning insurance, retirement contributions, and allowances efficiently
Structuring salary components smartly
Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.
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