How To Save Tax For a Salary Above 10 LPA

How To Save Tax For a Salary Above 10 LPA?

In India, residents are required to pay taxes following the tax bracket to which they belong. But there are ways to earn tax deductions through investment plans in different tax-saving instruments so that you pay no tax or zero tax on your income.

People are always looking for ways to avoid paying income tax. They do not, however, gain from salary optimization. As a result, if your income rises, so do your tax liabilities.

The new income tax regime and many other levies are amended in the Union Budget 2023, which the Indian government unveiled on February 1st, 2023. If an individual’s income surpasses a certain threshold, the government will impose an income tax as a direct tax on their annual income. 

Don’t miss out on the advice to save significantly through a variety of exclusions and exemptions if you’re looking for strategies to pay no tax on income up to Rs.10 lakh and beyond.

Old Income Tax Regime vs. New Income Tax Regime

The income tax slab rates for the old and new income tax systems are as follows-

Annual IncomeOld Tax RegimeNew Tax Regime
Up to Rs 2.5 lakhsNilNil
>2.5 lakhs – Rs 5 lakhs5% (however, full rebate)5%
>5 lakhs – Rs 7.5 lakhs20% + Rs. 12,500 above ₹ 5,00,000₹ 12,500 + 10% above ₹ 5,00,000
>7.5 lakhs – Rs 10 lakhs₹ 12,500 + 20% above ₹ 5,00,000₹ 37,500 + 15% above ₹ 7,50,000
Above ₹ 10,00,000₹ 1,12,500 + 30% above ₹ 10,00,000₹ 75,000 + 20% above ₹ 10,00,000

Tips to Save Tax With Income Over 10 LPA

Your tax obligations increase along with your income. Fortunately, there are several strategies to lower your tax obligation under Indian income tax laws. Let’s discuss them in detail!

1. Invest in Social Security Schemes (PPF, EPF, SSS)

Several government-mandated programs provide tax exemptions as well as substantial returns on overall investments. Under Section 80C of the Income Tax Act, individuals may deduct up to 1.5 lakh rupees from their total annual income as such investments were made. The following tools can be purchased to receive tax exemptions:

  • Senior Citizen Savings Scheme (SCSS)
  • Sukanya Samriddhi Yojana (SSY)
  • National Pension Scheme (NPS)
  • Public Provident Fund (PPF)
  • National Pension Scheme (NPS)

2. Claim Interest On Home Loan

Receiving a home loan has two advantages: it reduces your tax obligation and gives you the delight of home ownership.

Housing affordability in India is addressed through numerous government-mandated programs including the Pradhan Mantri Awas Yojana (PMAY) and the DDR (Delhi Development Authority) Housing Scheme. At the same time, Sections 80C and 24(b) lessen financial liability by reducing tax obligations.

  • Section 80C allows for deductions of up to 1.5 lakh rupees for the total annual income used for paying back the principal borrowed.
  • Section 24(b) of the home loan provides tax exemption on the interest portion up to a maximum yearly value of 2 Lakh.

3. Reduce Tax In One Go With Health Insurance

Having health insurance is becoming essential due to India’s escalating medical costs and declining health standards caused by many causes. These insurance plans to ease the financial burden on people and their respective families during times of deteriorating health.

You and your family need to have proper health insurance in this day and age. One benefit among several is a reduction of Rs 25,000 from the premium paid on it. That applies to the insurance policies you have for yourself, your spouse, your dependents, and your parents. Section 80D provides an additional benefit of Rs 25,000 for insurance purchased for your parents. If your parents are older, the deduction may be larger. You can save on taxes if you insure your family.

4. Opt for Life Insurance Plans

Taxes on premium payments and the amount distributed at maturity are waived for life insurance contracts, respectively.

Sections 80C and 10(10D) of the Income Tax Act provide provisions for premium payments and the sum assured received upon maturity or the insured’s untimely death, whichever occurs first. Tax exemptions of up to 1.5 lakh rupees are also available under Section 80CCC for the purchase or renewal of life insurance cover, as well as annuity payments on such plans through annual salaries.

5. Donate To Charity

Section 80G of the Income Tax Act allows a tax exemption of up to Rs. 2,000 for monetary donations to particular organizations. On the other hand, bank and wire transfers are completely or partially exempt from taxes.

You are qualified for deductions under Section 80GGA if you donate to a group that supports rural development or scientific research.

Cash donations are eligible for partial tax exemptions, whereas transfers made via check or draught are fully exempt.

6. Support a Political Party

According to Section 80GGC of the Act of 1961, any contributions to political parties or electoral trusts are eligible for tax exemptions.

If the organization is registered under Section 29A of the Representation of People Act of 1951, the total amount donated is free from income tax calculations.

Cash deposits are not permitted; such gifts must be made through wired or bank transfers directly.

Tips To Prevent Some Costly Mistakes

There are a few things to bear in mind if you are an Indian citizen earning a Salary and wish to reduce your tax burden.

  1. Initially, confirm that you have reported all of your revenue on your tax return. This includes any other revenue you earn from your job, such as tips, bonuses, wages, and salaries.
  1. Check that you are filing in the appropriate tax bracket. Consult a seasoned tax professional to determine your tax bracket.
  1. Finally, try to avoid submitting your taxes with any costly errors. This includes overpaying taxes or failing to claim all allowable deductions and credits. You may decrease your tax liability and file your taxes accurately with the assistance of a knowledgeable tax professional.

You now know how to reduce your salary tax burden in India. For people making above INR 10L per year, numerous options are available to reduce their income tax. Nonetheless, it is recommended that you seek the help of a qualified tax counsellor if you are unsure about tax preparation to receive the most benefits and deductions.

Article Published by

Related Posts

LIC Bima Ratna Vs Bima Jyoti policy
Probus Insurance

LIC Bima Ratna Vs Bima Jyoti

Life Insurance Corporation of India (LIC) is one of the most trusted and old life insurance companies that has achieved numerous milestones and broken

Read More »
LIC’s Dhan Rekha Vs. LIC’s Dhan Sanchay
Probus Insurance

LIC Dhan Rekha Vs. Dhan Sanchay

Life insurance becomes very important in the backdrop of rising prices, the transition to nuclear families, and changes in lifestyle habits. Every person needs

Read More »