Income Tax above 15 Lakh

The major changes announced in the Union Budget 2023 introducing a new income tax structure significantly impact the salaried class earning annually Rs. 15 lakhs and above. The key reason is the change in income tax on 15 lakhs at the tax rates of 20% from earlier applicable rates of 25% p.a. A holistic understanding of the new tax structure will help you to calculate the income tax on 15 lakhs salary and learn how to save tax on 15 lakhs salary.

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New Tax Regime Slabs as per Union Budget 2023

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 2023 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 Income Tax Slab Structure
(FY 2021-22)
New Income Tax Slab Structure
(FY 2022-23)
Income Spread Slab Rates (%) Maximum  Tax to be Charged per Income Slab Income Spread Slab Rates (%) Maximum Tax to be Charged Per Income Slab
Rs.2.50 Lakhs & below Tax Exempt NIL Rs.3 Lakhs and below Tax Exempt NIL
Rs.2.5 Lakhs- Rs.5 Lakhs 5% Rs. 12,500 Rs.3 Lakhs- Rs.6 Lakhs 5% Rs. 15,000
Rs.5 Lakhs- Rs.7.5 Lakhs 10% Rs. 12,500+ Rs. 25,000

=Rs. 37,500

Rs.6 Lakhs- Rs.9 Lakhs 10% Rs. 15,000+ Rs. 30,000

=Rs. 45,000

Rs.7.5 Lakhs- Rs.10 Lakhs 15% R. 37,500+ Rs. 37,500

=Rs. 75,000

Rs.9 Lakhs- Rs.12 Lakhs 15% Rs. 45,000+ Rs. 45,000

=Rs. 90,000

Rs.10 Lakhs- Rs.12.5 Lakhs 20% Rs. 75,000+ Rs. 50,000

=Rs. 1,25,000

Rs.12 Lakhs- Rs.15 Lakhs 20% Rs. 90,000+ Rs. 60,000

=Rs. 1,50,000

Rs.12.5 Lakhs- Rs.15 Lakhs 25% Rs. 1,25,000+ Rs. 62,500

=Rs. 1,87,500

Above Rs.15 Lakhs 30% Calculated @30% p.a. rate, as per annual income
Above Rs.15 Lakhs 30% Calculated @30% p.a. rate, as per annual income
In addition, you pay Cess at 4% and a Surcharge at applicable rates.
Union Budget 2023 capped the maximum applicable surcharge up to 25%.

Points to Note

  • The minimum income tax slab rate is 5%, while the maximum is 30% in both tax regimes.

  • The old slab structure comprises seven income ranges with specific income tax rates.

  • The new income tax regime comprises six income ranges, lowering the tax slab rates and removing the earlier applicable income tax rate of 25%.

  • The old tax structure continues with several deductions and exemptions under Section 80C, 80D, 80CCD, and more. 

  • The catch in the new tax regime is one has to give up on deductions and exemptions while computing their tax liability.

  • Therefore, the flexibility of reducing individual tax liability for the high-income class is more significant in the new tax slab rate structure.

  • On the other hand, it comes at a cost for the low and mid-income class if they do away with all the permissible deductions and exemptions per the old structure.

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

How to Save Tax for Salary above 15 Lakhs 

The slab structure ensures that your tax liabilities grow alongside your growing income. Fortunately, you can adopt multiple options to save tax on 15 lakhs income as per Income Tax Act, 1961. No wonder tax savings instruments are in great demand among taxpayers.

In addition, you build a stronger financial future while saving on your tax liability. So, let us check out the available avenues to save tax for 15 lakhs salary in India for an individual.

Income Tax Exemptions under Old Tax Regime

Save Rs.1.5 Lakhs on your Taxable Income under Sections 80C, 80CCC, and 80CCD:

  1. Financial Protection Instruments:

    • Term Insurance

    • Life Insurance

  2. Retirement and Long-Term Objectives:

    • Public Provident Fund (PPF) 

    • Employee Provident fund (EPF)

    • Unit Linked Insurance Plans (ULIP)

    • Pension or Annuity Plans from Insurance providers

    • National Pension Scheme (NPS) Tier-I Account

    • Senior Citizen’s Savings Scheme (SCSS)

    • Invest in Real Estate

  3. Investment for Child’s Future:

    • Sukanya Samriddhi Scheme (SSS)

    • Child Plans from Insurance Providers

  4. Wealth Protection:

    • National Savings Certificate(NSC)

    • Tax Saving Deposits – 5 Year

    • Life Insurance endowment and Money-back plans

Additional Rs.50000 reduction through Section 80CCD: The statutory deduction allowed under the NPS are:

  • The usual rate is 10% of the subscriber’s monthly salary, while it is 14% for government and bankers

  • For self-employed individuals, the accumulation is 20% of the annual income

  • You can contribute an additional Rs.50000 over the statutory deduction for claiming tax exemption of like amount

Save up to Rs.75000 on your tax liability under Section 80D: You can save by purchasing health insurance policies under the relevant section in the following scenarios.

Health Insurance for Yourself and Your Family:

  • Premium up to Rs.25000 for under 60 years

  • Coverage for children up to 25 years

Health Insurance for Parents:

  • Premium up to Rs.50,000 for senior citizen parents

  • However, the limit is Rs.25,000 if the parents are not senior citizens

Preventive Health Check-up: In addition, Rs. 5000 for a health check-up under each policy

Reduce your tax liability up to Rs. 2 Lakhs under Section 24:

  • You can claim a deduction of up to Rs. 2 Lakhs on housing loan interest payments under Section 24 (B)

  • You can claim principal repayment during the financial year under Section 80C.

As per the announcement made in the Union Budget 2023, the standard tax deductions are allowed up to Rs. 52,000 as per the old tax regime (previously, the limit was up to Rs. 50,000).

Income Tax Exemptions under New Tax Regime

With the lowering of income tax rates for respective income slabs, the government removed the earlier available tax exemptions. 

However, an individual can claim the following tax exemptions and deductions under the new tax regime:

  • Tax rebate if income is up to Rs. 7 lakhs (income limit is Rs. 5 lakhs as per old tax regime).

  • Deductions for the contribution made in employee’s pension fund account u/ Section 80 CCD (2) of the Income Tax Act, 1961.

Income Tax for 15 Lakhs Salary in India

To calculate the income tax on the 15 lakhs salary in India, the computation is without any deductions, barring the standard deductions as per the new tax regime.

Therefore, you can save income tax liability substantially by using the above-described investment avenues depending on the tax benefits you gain under old vs. new income tax regimes. 

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.

Old Income Tax Slab Structure New Income Tax Slab Structure
Title Amount Title  Amount
Total Salary Total Salary
Annual Income Rs. 15,00,000 Annual Income Rs. 15,00,000
Deduction Deduction No tax exemptions are available
Section 80C Rs. 1,50,000 Section 80C --
Section 80D Rs. 25,000 Section 80D --
NPS Deductions Rs. 25000 NPS Deductions --
Deduction for Interest paid on House Loan Rs. 50,000 Deduction for Interest paid on House Loan --
Total Tax Deductions Rs. 2,50,000 Total Tax Deductions NIL
Taxable Income Rs. 12,50,000 Taxable Income Rs. 15,00,000
Slab Rates Tax Amount Slab Rates Tax Amount
5%( for tax slab of  Rs. 2.5 lakhs- 5lakhs) Rs.12,500 5% (for tax slab of Rs. 3 lakhs- 6 lakhs) Rs.15,000
10% (for tax slab of Rs. 5 lakhs-Rs. 7.5 lakhs) Rs. 25,000 10% (for tax slab of Rs. 6 lakhs- Rs. 9 lakhs) Rs.30,000
15% (for tax slab of Rs. 7.5 lakhs- Rs. 10 lakhs) Rs. 37,500 15% (for tax slab of Rs. 9 lakhs- Rs. 12 lakhs) Rs.45,000
20% (for tax slab of Rs. 10 lakhs- 12.5 lakhs) Rs. 50,000 20% (for tax slab of Rs. 12 lakhs- Rs. 15 lakhs) Rs. 60,000
25% (for tax slab of Rs. 12.5 lakhs- 15 lakhs) NOT APPLICABLE (as taxable income is Rs. 12,50,000) -- --
Total Tax Rs.12,500+ Rs. 25,500+ Rs. 37,500+ Rs. 50,000

=Rs. 1,25,000

Total Tax Rs. 15,000+ Rs. 30,000+ Rs. 45,000+ Rs. 60,000

=Rs.1,50,000

Cess @ 4%  = 4% of Rs. 1.25 lakhs

= Rs. 5,000

Cess @ 4% = 4% of Rs. 1.5 lakhs

= Rs. 6,000

Tax as per Slab Rates+ Cess Rs. 1,25,000+ Rs. 5,000

=Rs. 1,30,000

Tax as per Slab Rates+ Cess Rs. 1,50,000+ Rs. 6,000

= Rs. 1,56,000

Total Tax Liability Rs. 1,30,000 Total Tax Liability Rs. 1,56,000

Points to Note

  • The tax liability under the old tax structure is slightly less as compared to the new tax structure, with a difference of Rs. 26,000 per annum.

  • Therefore, you can choose either slab structure while filing your ITR for the relevant financial year while considering all the tax exemptions available to you as per your annual income and investments.

  • It must be noted that you can further reduce your tax liability through the old tax slab rates by increasing your deductions beyond Rs.2.5 Lakhs for an annual salary of up to Rs.15 Lakhs.

  • However, it must be noted that the tax-saving investments are low-yielding, which avail you tax exemptions under the old tax regime. 

  • Consequently, consider the new slab structure while freeing your investible funds for deployment in market instruments to create wealth through higher yields.

In Conclusion

The overall benefits as per the alternative tax slab structure stand under analysis. Consider both options carefully before switching. Moreover, the new rate structure is less complicated for taxpayers to understand. In addition, you do not have to look for tax-saving instruments to reduce your tax liability when you can deploy your funds elsewhere and earn handsome returns in the long run. However, it helps, as the choice is optional.

FAQ's

  • What is the tax on 15-lakh income?

    A tax of up to Rs. 1.5 lakhs with an additional 4% cess will be applicable as per the new tax regime, considering no tax deductions are provided. As per the old tax regime, if an individual claims Rs. 2.5 lakhs for tax exemptions, then the applicable tax liability is Rs. 1.25 lakhs with an additional cess of 4%.
  • How to save tax for income above 15 lakhs?

    You can consider investing in the following plans and schemes in order to save tax for income above 15 lakhs under the old tax regime:
    • ULIP plans
    • EPF and PPF schemes
    • Life insurance policies
    • Home loan premiums
    • Buy a new home with the gains from long-term capital gains
  • Is 10-lakh income tax-free?

    No, the income of Rs. 10 lakhs is not completely tax-free. In the Union Budget 2023, income up to Rs. 3 lakhs is free from any tax. However, one can claim tax deductions as applicable under the Income Tax Act of 1961.
  • How much income is tax-free?

    As per the announcements made in the Union Budget 2023, the income tax slab of up to Rs. 3 lakhs attracts no tax rates. Individuals earning income up to Rs. 7 lakhs can claim for 100% tax rebate.

*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
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ

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