Income Tax Above 10 Lakh

Earning Rs. 10 lakhs in India is a significant achievement, but it also comes with tax liabilities under both the old and new income tax regimes. Whether you are a salaried professional or a freelancer, understanding the nuances of income tax above 10 lakhs is crucial to ensure compliance, optimize your finances, and avoid unnecessary burdens. Here are the details of income tax calculation for income levels above Rs. 10 lakhs that will help you file your Income Tax Returns (ITR) in the FY 2023-24 easily.

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Introduction of New Tax Regime in FY 2023-24 (2024-25)

The New Tax Regime, introduced in Budget 2020, was further refined in the 2023 Budget, offering some key changes for the financial year 2023-24 (Assessment Year 2024-25). 

NOTE: The government allows you to choose between the old and new tax regime, with the new tax regime as the default choice for filing your ITR in the Financial Year 2023-24.

Key Highlights of the New Tax Regime:

  • Increased Basic Exemption Limit: The new regime offers a higher basic exemption limit of Rs. 3 lakhs compared to Rs. 2.5 lakhs in the old regime. 

  • Simplified Tax Structure: The new regime eliminates several deductions and exemptions available in the old regime. 

  • Lower Tax Rates for Certain Income Brackets: The new regime has lower tax rates for income brackets above Rs. 5 lakhs compared to the old regime. 

  • For Example: The tax rate for income between Rs. 5 lakhs and Rs. 6 lakhs is 5% in the new regime compared to 20% in the old regime. 

In order to calculate the income tax above Rs. 10 lakhs, you need to understand the tax slab rates for the Old vs. New Income Tax Regime. This will also help you to decide the tax regime for you while filing your Income Tax Returns (ITR) or paying the Tax Deduction at Source (TDS). 

Income Tax Slabs under Old Tax Regime and New Tax Regime in FY 2023-24 (AY 2024-25)

The following table helps you to understand the income tax regime for Financial Year 2023-24 and learn the tax on Rs. 10 lakh income and above:

Income Tax Slab Income Tax Rate (in % p.a.)
Old Tax Regime (FY 2023-24) New tax Regime (until 31 March 2023) New Tax Regime (since 01 April 2023)
For Individuals/ HUFs/ NRIs (age < 60 years) For Individuals/ HUFs/ NRIs (age 60 - 80 years) For Individuals/ HUFs/ NRIs (age > 60 years)
0 – Rs. 2.5 lakhs NIL NIL NIL NIL NIL
Rs. 2.5 lakhs – Rs. 3 lakhs 5% (Rebate u/ Section 87A is available) NIL NIL 5% (Rebate u/ Section 87A is available) NIL
Rs. 3 lakhs – Rs. 5 lakhs 5% (Rebate u/ Section 87A is available) 5% (Rebate u/ Section 87A is available) NIL 5% (Rebate u/ Section 87A is available) 5% (Rebate u/ Section 87A is available)
Rs. 5 lakhs – Rs. 6 lakhs 20% 20% 20% 10% 5% (Rebate u/ Section 87A is available)
Rs. 6 lakhs – Rs. 7.5 lakhs 20% 20% 20% 10% 5% (Rebate u/ Section 87A is available)
Rs. 7.5 lakhs – Rs. 9 lakhs 20% 20% 20% 15% 10%
Rs. 9 lakhs – Rs. 10 lakhs 20% 20% 20% 15% 15%
Rs. 10 lakhs – Rs. 12 lakhs 30% 30% 30% 20% 15%
Rs. 12 lakhs – Rs. 12.5 lakhs 30% 30% 30% 20% 20%
Rs. 12.5 lakhs – Rs. 15 lakhs 30% 30% 30% 25% 20%
Rs. 15 lakhs & above 30% 30% 30% 30% 30%

Surcharge

A surcharge is a tax over the income tax payable for an assessee falling in the high-income bracket. 

Following are the taxable income ranges of old and new tax regimes for which the applicable surcharge rates are:

Surcharge for FY 2023-24 (Assessment Year 2024-25)
Income Range Surcharge Rates for Old Tax Regime 2023-24 Surcharge Rates for  New Tax Regime 2023-24
> Rs. 50 Lakhs to < Rs. 1 Crore 10% 10%
> Rs. 1 Crore to < Rs. 2 Crores 15% 15%
> Rs. 2 Crores to < Rs. 5 Crores 25% 25%
> Rs. 5 crores to < Rs. 10 Crores 37% 25%*
> Rs. 10 Crores above 37% 25%*

*Union Budget 2023 limits the highest surcharge rates at 25% per annum.
Disclaimer: Policybazaar does not endorse, rate, or recommend any particular insurer or insurance product offered by an insurer.

Invest & Save upto ₹46,800 per annum in taxInvest & Save upto ₹46,800 per annum in tax

Tax Deductions and Exemptions Available under New Income Tax Regime

Tax Deductions/ Exemptions Details Old Tax Regime Previous Tax Regime New Tax Regime (Applicable from 01 April 2023)
Income Limit for Tax Rebate Provided for a specific income limit Rs. 5 lakhs Rs. 5 lakhs Rs. 7 lakhs
Section 87A 100% rebate up to Rs. 25,000 for income up to Rs. 7 lakhs Rs. 12,500 Rs. 12,500 Rs. 25,000
Standard Deduction Rs. 50,000 for Salaried Class individuals Rs. 50,000 NA Rs. 50,000
Effective Tax-Free Salary Income After deductions and exemptions on salary Rs. 5.5 lakhs Rs. 5 lakhs Rs. 7.5 lakhs
Standard Deduction on Family Pension Lower of Rs. 15,000 or 1/3rd of pension amount for Pensioners Rs. 15,000 Rs. 15,000 Rs. 15,000
HRA Exemption Applies to HRA allowance for salaried employees YES NO NO
Transport Allowance Applicable to Specially Abled individuals YES YES YES
Conveyance Allowance For travel to work or on transfer YES YES YES
Entertainment Allowance & Professional Tax Deductions on entertainment allowance and professional tax YES NO NO
Perquisites for Official Purposes Deductions on perquisites paid for office purposes YES YES YES
Section 80CCD(1) Employee's contribution to the NPS Account YES NO NO
Section 80CCD(2) Employer's contribution to the NPS account of an employee YES YES YES
Section 80C ULIP/ ELSS/ LIC/ PPF/ Tax-Saver FDs/ Child Tuition Fee YES NO NO
Section 80D Medical insurance premium YES NO NO
Section 80E Interest on education loan YES NO NO
Section 80 EEB Interest on Electric Vehicle (EV) loan YES NO NO
Section 80G Donations to political parties YES NO NO
Section 80JJAA When new employees are employed YES YES YES
Section 80U For disabled individuals YES NO NO
Other Chapter VI-A Deductions Under Chapter VI-A of the IT Act, 1961 YES NO NO
Section 32 Depreciation on tangible assets (excluding additional depreciation) YES YES YES
Section 24(B) Interest on home loan for self-occupied or vacant property YES NO NO
Section 24(A) Interest on home loan for letting out property YES YES YES
Section 80 CCH Contributions to Agniveer Corpus Fund YES NOT EXISTED YES
Gifts Up to Rs. 50,000 YES YES YES
Section 10(10C) Voluntary retirement amount YES YES YES
Section 10(10) Gratuity amount YES YES YES
Section 10(10AA) Leave encashment YES YES YES

Illustration of Tax on 10 Lakh Income

For example, Mr Prateek has an annual salary of Rs. 10 lakhs. 

As per the old tax regime, the total investments made by him under Section 80C of the Income Tax Act, 1961, is Rs. 1,50,000 under the following options:

  • ELSS (Equity Linked Savings Scheme)

  • LIC premium

  • PF (Provident Fund)

  • Home loan principal instalment (Home loan interest of Rs. 75,000 has been paid by him in the financial year 2021 – 2022)

  • Mr Prateek also purchased medical insurance of Rs. 28,000 in his and his spouse's names apart from the Section 80C investments.

Mr. Prateek can claim the above deductions if he opts for the old tax regime, whereas deductions are not allowed in the new tax regime. 

Let us understand the tax flow of Mr Prateek in both tax regimes through a table:

Details Old Tax Regime New Tax Regime
Gross Income Rs. 10,00,000 Rs. 10,00,000
Deductions:
Under Section 80C Rs. 1,50,000
Under Section 80D Rs. 25,000
Under Section 24(b) Rs. 75,000
Total Taxable Income Rs. 750,000 Rs. 1,000,000
Old Tax Slab Regime
Rs. 0 to 2.5 Lakh
Rs. 2.5 to 5 Lakh @ 5% Rs. 12,500 --
Rs. 5 to 7.5 Lakh @ 10% Rs. 25,000 --
New Tax Slab Regime
Rs. 0 to 3 lakh -- 0
Rs. 3 to 6 lakh @ 5% -- Rs. 15,000
Rs. 6 to 9 lakhs @ 10% -- Rs. 45,000
Rs. 9 lakhs to 10 lakhs @ 15% -- Rs. 15,000
Income Tax Rs. 37,500 Rs. 75,000
Cess @ 4% Rs. 1,500 Rs. 3,000
Total Tax Levied Rs. 39,000 Rs. 78,000

Summing It Up!

The income tax on Rs. 10 lakh income is a crucial aspect of financial planning and fiscal responsibility. Understanding the applicable tax rates and deductions is essential for individuals to optimize their tax liabilities. It is advisable for taxpayers to stay informed about any changes in tax laws and leverage available exemptions to maximize their take-home income while fulfilling their tax obligations.

FAQ's

  • Is 10 lakh income tax-free?

    No, 10 lakh income is not entirely tax-free in India. It depends on which tax regime you choose between the old vs. new tax regime, and whether you claim any eligible deductions and exemptions.
  • How to avoid tax for 10 lakhs?

    It is important to understand that avoiding tax altogether is illegal and unethical. Your goal should be to minimize your tax liability within legal and ethical boundaries. Here are some ways to achieve that with Rs. 10 lakh income:
    • Choosing the right tax regime between the old and new tax regime

    • Maximizing eligible deductions and exemptions

    • Planning your income and investments strategically

  • How much income is tax-free?

    The amount of income that is tax-free in India depends on which tax regime you choose: old or new.
    • New Regime: 

      • No tax is payable on income of up to Rs. 3 lakhs 

      • Income of up to Rs. 7,00,000 is eligible for a tax rebate under section 87A

    • Old Regime: 

      • No tax is payable on income of up to Rs. 2.5 lakhs 

      • Income of up to Rs. 5,00,000 is eligible for a tax rebate under section 87A

  • How much tax do I have to pay for 10 lakhs?

    The amount of tax you have to pay for 10 lakhs (1,000,000 rupees) in India depends on which tax regime you choose: old or new.
    • Old Regime: Tax rate on 10 lakhs is 30% p.a.

    • New Regime: Tax rate on 10 lakhs is 20% p.a.

*All savings are provided by the insurer as per the IRDAI approved insurance plan.
*Tax benefit is subject to changes in tax laws. Standard T&C Apply
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
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