People in India are subject to income taxes that are determined by the tax bracket they are in. People are always looking for ways to minimise income tax. They do not, however, proper know- how for salary optimization. As a result, as your income rises, so do your tax liabilities.
Fortunately, Indian income tax regulations provide a number of options for reducing your tax liability. One of the best and most profitable methods to lower your tax liability is through investments that save you money.
If you wish to pay no tax on a salary of 10 lakh, read this blog. This site offers a variety of tips on tax planning for incomes above Rs. 10 lakhs.
Let’s start by going over the different tax structures and how to choose amid the old and new tax structures.
Income tax slab rates for FY 2022-23 (AY 2023-24) – New tax regime & Old Tax regime
|Slab||Old Tax Regime Slab Rates for FY 22-23 (AY 23-24)||New Tax Regime Slab Rates|
|Resident Individuals & HUF < 60 years of age & NRIs||Resident Individuals & HUF > 60 to < 80 years||Resident Individuals & HUF > 80 years||Before Budget 2023||After Budget 2023|
|(until 31st March 2023)||(From 1st April 2023)|
|₹3,00,000-₹5,00,000||5%||5% (tax rebate u/s 87A is available)||NIL||5%||5%|
To save more on income tax for a 10 lakh salary, you need be aware of your wage structure.
Salary recipients are eligible for a number of Deductions and Exemptions. Taxable Income is the portion of a pay that is liable to taxation and is not exempt in any way. As a result, the wage component of your compensation may also include other tax-free advantages. The remainder of your wage will therefore be your taxable income.
So, maximising your tax deductions and exemptions might lessen your tax burden.
Several salary components qualify for Tax Exemptions, including-
|Paying health insurance policy premium (Section 80D)||Self, your spouse, and your dependent children:|
|Rs 25,000 (Rs 50,000 if aged 60 and above)|
|Parents: Rs 25,000 (Rs 50,000 if aged 60 and above)|
|Interest deduction for 8 years from the year of repayment of loan taken for the higher education of yourself, your spouse, dependent children, or a student of whom you are|
|the legal guardian|
|Donating to Charity ( Section 80G)||50% or 100% of the eligible amount|
|Investing in tax saving instruments (Section 80C)||Tax benefit of Rs.1,50,000 per year. You can invest in the|
|– Employees’ Provident Fund (EPF)|
|– Public Provident Fund (PPF)|
|– Equity Linked Saving Scheme funds (ELSS)|
|– Home loan repayment and Stamp duty|
|– Sukanya Smriddhi Yojana (SSY)|
|– National Savings Certificate (NSC)|
|– Fixed Deposit for 5 years, and more|
|Costs to treat disabled parents (Sectio n 80DD)||If you have disabled dependents for whom you bear|
|medical expenses, you are eligible for the tax relief:|
|– 40% disability: Rs.75,000|
|– 80% disability: Rs.1,25,000|
|Deductions on home loan payments||Principal amount: Upto Rs 1.5 lakhs u/s 80C
Interest amount: Upto Rs 2 lakhs paid u/s 24b
|Maturity amount of a Life Insurance Policy||Maturity proceeds are tax exempt if the sum assured is ≤:|
|– 20%: policies issued before 1 April 2012|
|– 10%: policies issued after 1 April 2012|
|– 15%: policies issued after 1 April 2013 for a person with disability or disease.|
|Children’s education and hostel allowance||-9,600|
|Taxable Salary Income||7,24,000|
|80C (Refer note below)||(1,50,000)|
|Net Taxable Income||4,99,000|
|Tax on the above income||12,450|
|Rebate u/s 87A||-12,450|
Additionally, you may claim these deductions if eligible:
|Interest on home loan deduction u/s 24b||(2,00,000)|
|Home loan 80EEA||(1,50,000)|
The easiest strategy to lower your tax obligation for a salary over Rs. 10 lakhs is to go for the old tax system and make use of all available exemptions and deductions on tax-saving investments. Alternatively, you can use the new tax code to submit your income tax return. Once chosen, you are unable to use any carried-forward losses or tax-saving investment deductions. So it is advised that you carefully analyse every aspect of your revenue.
We hope that this blog post has given you a better understanding of the income tax deductions and exemptions, as well as how you might lower your tax obligation if your tax burden exceeds Rs.10 lakh.
All the above information are as per best of our knowledge .Please do not rely completely on above .It’s just an example of the way one can save on tax. Final decision of an individual should be backed by his own sources and study.