Income Tax above 15 Lakh

New Tax Slabs as per Union Budget 2025

Individuals pay taxes on their annual income based on the tax slab rates proposed in the Finance Bill during the budget session. However, the Union Budget 2025 presented the taxpayers with an option u/ Sec 115 BAC of the IT Act, 1961, to choose between two income tax slab rates with varying approaches.

The new tax regime is applicable by default if you do not opt to switch to the old tax regime. The judicious use of an income tax calculator will help in commencing your tax planning exercises.

Refer to the table below to learn the old vs. new tax structure and the maximum income tax applicable without any tax exemptions and deductions for the respective tax slabs:

Old Tax Regime Income Tax Slabs for FY 2025-26 (AY 2026-27)

For Individuals below 60 years of age (Residents & Non-Residents)

(Note: A rebate under Section 87A of up to ₹12,500 is available for resident individuals with total taxable income up to ₹5,00,000.)

For Senior Citizens (60 years to less than 80 years of age) (Residents Only)

For Super Senior Citizens (80 years of age and above) (Residents Only)

How to Save Tax for Salary above 15 Lakhs in India

Your tax liabilities increase with your income. Fortunately, the Income Tax Act, 1961 provides multiple options to help you save on taxes. Tax-saving instruments not only reduce your tax burden but also help you build a stronger financial future.

For salaried individuals earning over ₹15 lakhs, understanding both the Old and New Tax Regimes is crucial to making an informed decision. The New Tax Regime is now the default option, but you can choose to file under the Old Tax Regime.

Income Tax Exemptions under the Old Tax Regime

This regime allows you to claim numerous exemptions and deductions to lower your taxable income.

1. Save up to ₹1.5 Lakhs under Sections 80C, 80CCC, and 80CCD:

   This is the most popular tax-saving section, offering deductions for a variety of investments and expenses up to a combined limit of ₹1.5 lakhs.

   • Financial Protection Instruments:
     • Term Insurance
     • Life Insurance premiums
     • Unit Linked Insurance Plans (ULIPs)
   • Retirement and Long-Term Objectives:
     • Public Provident Fund (PPF)
     • Employee Provident Fund (EPF)
     • Pension Plan or Annuity Plan from Insurance providers
     • National Pension Scheme (NPS) Tier-I Account (within the overall ₹1.5 lakh limit)
   • Investments:
     • Equity Linked Savings Scheme (ELSS)
     • National Savings Certificate (NSC)
     • Tax Saving Deposits – 5 Year
   • Other Expenses:
     • Principal repayment on a home loan
     • Sukanya Samriddhi Scheme (SSS)
     • Children's tuition fees (for up to two children)

2. Additional ₹50,000 deduction through Section 80CCD(1B):

   You can claim an additional deduction of up to ₹50,000 for your personal contribution to the National Pension Scheme (NPS) Tier-I account. This is over and above the ₹1.5 lakh limit of Section 80C.

3. Reduce Tax Liability up to ₹75,000 under Section 80D

   You can save tax by paying for health insurance premiums for yourself, your family, and your parents.

   • Health Insurance for Yourself, Spouse, and Dependent Children:
     • Deduction up to ₹25,000 (if a non-senior citizen).
   • Health Insurance for Parents:
     • Deduction up to ₹50,000 (if a senior citizen).
     • Deduction up to ₹25,000 (if a non-senior citizen).
   • Preventive Health Check-up:
     • A deduction of up to ₹5,000 is included within the overall limits for a health check-up.

4. Reduce Tax Liability up to ₹2 Lakhs under Section 24

   You can claim a deduction of up to ₹2 lakhs on the interest paid on a housing loan for a self-occupied property. The principal repayment of this loan can also be claimed under Section 80C.

5. Standard Deduction

   Salaried individuals can claim a standard deduction of ₹50,000 from their salary income, regardless of any investment.

Income Tax Exemptions under the New Tax Regime

The New Tax Regime offers lower tax rates but allows for very few deductions and exemptions. This regime has now been made the default option.

• Standard Deduction: Salaried individuals are now eligible for a standard deduction of ₹75,000.
• Tax Rebate: A tax rebate under Section 87A is available for resident individuals with a taxable income up to ₹12 lakhs. This rebate is up to ₹60,000, effectively making their tax liability zero.
• Deductions for NPS Contributions:
  • Section 80CCD(2): Your employer's contribution to your NPS account is deductible. The limit is up to 10% of your salary (Basic + DA) for private-sector employees and 14% for government employees.
  • Section 80CCD(1B): You can also claim an additional deduction of up to ₹50,000 for your self-contribution to NPS, over and above any other deductions.

Note: Most of the common deductions available in the old regime, such as those under Section 80C, 80D, and interest on home loans (Section 24), are not available in the new regime.

Income Tax for ₹15 Lakhs Salary in India

To calculate the income tax on a ₹15 lakh salary, you must first decide which regime to opt for.

• New Tax Regime: The calculation is straightforward with very few deductions, primarily the standard deduction and NPS contributions (if any). The lower tax slab rates are applied to your income.
• Old Tax Regime: You must first reduce your gross salary by claiming all eligible deductions (80C, 80D, HRA, home loan interest, etc.) before calculating the tax based on the older tax slabs.

Calculating Tax for Rs. 15 Lakhs Salary in India under Old vs. New Income Tax Regime

The following grid summarizes the overall permissible amount of Rs. 15 Lakhs annual income:

Important Note: A 4% Health and Education Cess is applicable on the calculated income tax liability in both regimes. Surcharge may also apply for higher income brackets as per the prevailing rules. It is always recommended to perform a detailed calculation under both regimes to ascertain which one is more beneficial for your specific financial situation.

Points to Note:

• New Tax Regime is Default: It's the standard, but you can still choose the old one.
• New Regime Benefits: Higher basic exemption (Rs. 4L), and no tax up to Rs. 12L (due to Rs. 60K rebate).
• Standard Deduction: Rs. 75,000 in New Regime, Rs. 50,000 in Old Regime.
• Old Regime Deductions Lost: Most 80C, 80D, HRA, and home loan interest (Sec 24b) deductions are not in the New Regime.
• NPS Exception: Employer's NPS (80CCD(2)) and extra Rs. 50,000 NPS (80CCD(1B)) are allowed in the New Regime.
• Old Regime Value: Still better if you have many deductions to claim.
• Always Compare: Calculate tax under both regimes to find your best option.
• FY 2025-26 Rules: All info is for the current financial year (FY 2025-26).

Conclusion

If your income exceeds ₹15 lakh, proactive tax planning becomes essential. Whether you choose the old regime with multiple exemptions or the new regime with lower rates, understanding the impact of each regime can help you minimize your tax liability. Evaluate your eligible deductions, exemptions, and lifestyle goals before deciding. An informed approach ensures both tax efficiency and long-term financial growth.