Income Tax above 15 Lakh

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: 

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.

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.

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.

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