{"id":5909,"date":"2025-06-25T20:07:26","date_gmt":"2025-06-25T14:37:26","guid":{"rendered":"https:\/\/1finance.co.in\/magazine\/?post_type=blog&p=5909"},"modified":"2025-09-15T12:32:32","modified_gmt":"2025-09-15T07:02:32","slug":"how-to-save-tax-for-salary-above-rupees-15-lakh","status":"publish","type":"blog","link":"https:\/\/1finance.co.in\/1f-dashboard\/blog\/how-to-save-tax-for-salary-above-rupees-15-lakh\/","title":{"rendered":"How to save tax for salary above \u20b915 lakh\u00a0"},"content":{"rendered":"

Earning over \u20b915 lakh a year is a significant milestone. It reflects your hard work, dedication, and the trust your organisation places in you. However, this success brings with it an important responsibility – tax planning. If you don\u2019t plan wisely, a big chunk of your income could go towards taxes. The good news is that India\u2019s tax system offers a variety of ways to reduce your tax liability. In this guide, we will walk you through practical strategies and real-life scenarios to help you save taxes efficiently for the financial year 2025\u201326. We will also compare the old and new tax regimes<\/a> to help you decide what suits you best.<\/span><\/p>\n

What are your tax obligations if you earn more than \u20b915 lakh annually?<\/h2>\n

When your income crosses the \u20b915 lakh mark, you enter the highest tax brackets in India. Under the old tax regime, any income exceeding \u20b910 lakh is taxed at 30%, plus a 4% health and education cess. In contrast, the new tax regime offers lower tax rates but restricts the deductions you can claim.<\/span><\/p>\n

Lets take an example of Janmesh, a 35-year-old product manager from Bangalore earning \u20b916.2 lakh per year as salary, dividend of \u20b960,000 and having long term capital gain from sale of shares of \u20b9 1.5 lakh.<\/span><\/p>\n

New vs. old tax regime: Which one works best for those earning more than \u20b915 lakh?<\/h2>\n

Choosing the most beneficial tax regime is the foundation of tax planning.<\/a> The old regime allows you to claim various deductions and exemptions. On the other hand, the new regime simplifies the process by offering reduced tax rates, but it comes at the cost of foregoing most deductions and exemptions.<\/span><\/p>\n

If you’re someone like Mr. Janmesh who has structured his salary smartly and claims significant deductions, the old regime will usually result in lower tax outgo. However, if you don’t have many deductions or prefer a hassle-free tax filing<\/a> experience, the new regime might be better.<\/span><\/p>\n

Will you get standard deduction, Section 87A benefit if you earn above \u20b915 lakh?<\/h2>\n

Both tax regimes offer a standard deduction, but the amounts differ. In the old regime, it is fixed at \u20b950,000 for salaried employees, whereas in the new regime it is \u20b975,000. This amount is directly reduced from your gross salary.<\/span><\/p>\n

Section 87A talks about rebate, which provides tax relief to individuals earning up to \u20b912 lakh under the new regime, but does not apply if your income crosses this limit. So, for high-income individuals, this rebate is irrelevant. It becomes crucial to focus on other deductions and exemptions to reduce the taxable income.<\/span><\/p>\n

How to maximise Section 80C benefits when you earn more than \u20b915 lakh<\/h2>\n

Section 80C is one of the most popular tax-saving tools in India, allowing deductions up to \u20b91.5 lakh. High earners can take full advantage of this by investing or spending in eligible options. In Janmesh’s case, he strategically allocates his 80C limit by investing \u20b940,000 in ELSS (Equity Linked Saving Scheme) mutual funds, contributing \u20b920,000 to a PPF account, and claiming \u20b990,000 as principal repayment on his home loan.<\/span><\/p>\n

Hence, the comprehensive use of 80C not only ensures tax savings but also aligns with his long-term financial goals.<\/span><\/p>\n

How to claim Section 80D deductions for an income of more than \u20b915 lakh<\/h2>\n

Health insurance premiums are another excellent way to reduce taxable income. Under Section 80D, you can claim up to \u20b925,000 for premiums paid for yourself, spouse, and dependent children. If you’re also paying for your parents’ insurance and they are senior citizens, you can claim an additional amount of up to \u20b950,000.<\/span><\/p>\n

In Janmesh\u2019s case, he pays \u20b920,000 annually for his family\u2019s health insurance and another \u20b940,000 for his parents’ health insurance. That totals to \u20b960,000, which is entirely deductible from his gross total income. Apart from saving tax, this also provides much-needed financial security in case of medical emergencies.<\/span><\/p>\n

What NPS tax benefits can you claim if you earn more than \u20b915 lakh?<\/h2>\n

The National Pension System (NPS) is a powerful yet underused tax-saving option, especially for high earners. You can claim an additional deduction of \u20b950,000 under Section 80CCD(1B) over and above the section 80C limit of \u20b91.5 lakh . Moreover, your employer’s contribution to NPS is also deductible up to 10% of basic salary under the old regime and up to 14% of basic salary under the new regime.<\/span><\/p>\n

In Janmesh\u2019s case, he invests \u20b950,000 on his own and his employer contributes another \u20b975,000. He can maximise this by restructuring his salary so that his employer contributes \u20b91.62 lakh. For ease of understanding, we have assumed his total salary as basic salary. This means an additional \u20b987,000 as deduction, if he continues to follow the old regime. Under the new regime, this deduction can go up to \u20b92.26 lakh (14% of salary). That\u2019s a substantial saving, along with creating a retirement corpus.<\/span><\/p>\n

Owning property? How to claim home loan deductions smartly for income of over \u20b915 lakh<\/h2>\n

If you have a home loan, don\u2019t miss out on the benefits under Section 24(b). You can claim up to \u20b92 lakh per year as a deduction for interest paid on a self-occupied property. The principal portion qualifies under Section 80C.<\/span><\/p>\n

In Janmesh\u2019s case, he pays around \u20b91.8 lakh in annual interest. He can claim the benefit of the same under the old regime and reduce his taxable income significantly.<\/span><\/p>\n

Capital gains and income from other sources at \u20b915 lakh+ salary<\/h2>\n

High earners often have additional income from sale of shares and dividends. It\u2019s important to understand how these are taxed:<\/span><\/p>\n

    \n
  • LTCG (Long-term capital gains) on sale of shares above \u20b91.25 lakh\/year is taxed at 12.5%.<\/span><\/li>\n
  • STCG (Short-term capital gains) on sale of shares\u00a0 is taxed at 20%.<\/span><\/li>\n
  • Dividend Income is taxed as per applicable slab rate.<\/span><\/li>\n<\/ul>\n

    In Janmesh\u2019s case, he earned \u20b960,000 in dividends and \u20b9150,000 as long term capital gain from sale of shares.<\/span><\/p>\n

    Getting a salary of more than \u20b915 lakh? CTC vs in-hand salary & tax implications<\/h2>\n

    Many professionals focus on their CTC without understanding what actually hits their bank account. For example, Janmesh\u2019s CTC is \u20b916.2 lakh, but after accounting for capital gains, provident fund, insurance, taxes, and deductions, his monthly in-hand is around \u20b992,000 under the old regime. However, because of thoughtful tax planning, he manages to save nearly \u20b962,681 annually in taxes by opting out of the old regime, which boosts his net effective income.<\/span>
    \n<\/span><\/p>\n

    \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
    Particulars<\/b><\/td>\nOld Regime (\u20b9)<\/b><\/td>\nNew Regime (\u20b9)<\/b><\/td>\n<\/tr>\n
    Basic Salary<\/td>\n1,620,000<\/td>\n1,620,000<\/td>\n<\/tr>\n
    Standard Deduction<\/td>\n-50,000<\/td>\n-75,000<\/td>\n<\/tr>\n
    House Property Income<\/td>\n-180,000<\/td>\n–<\/td>\n<\/tr>\n
    Capital Gains<\/td>\n150,000<\/td>\n150,000<\/td>\n<\/tr>\n
    Other Income<\/td>\n60,000<\/td>\n60,000<\/td>\n<\/tr>\n
    Deductions under Chapter VI A<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
    – Section 80C<\/td>\n-150,000<\/td>\n–<\/td>\n<\/tr>\n
    – Section 80CCD(1B)<\/td>\n-50,000<\/td>\n–<\/td>\n<\/tr>\n
    – Section 80CCD(2)<\/td>\n-75,000<\/td>\n-226,800<\/td>\n<\/tr>\n
    – Section 80D<\/td>\n-60,000<\/td>\n–<\/td>\n<\/tr>\n
    Total Taxable Income<\/td>\n1,265,000<\/td>\n1,528,200<\/td>\n<\/tr>\n
    Tax Payable<\/td>\n156,130<\/td>\n93,449<\/td>\n<\/tr>\n
    – On Normal Income<\/td>\n147,000<\/td>\n86,730<\/td>\n<\/tr>\n
    – On Special Income<\/td>\n3,125<\/td>\n3,125<\/td>\n<\/tr>\n
    – Health & Education Cess<\/td>\n6,005<\/td>\n3,594<\/td>\n<\/tr>\n
    Savings in Tax<\/td>\n–<\/td>\n62,681<\/td>\n<\/tr>\n
    Net Cash in Hand<\/td>\n1,108,870<\/td>\n1,434,751<\/td>\n<\/tr>\n
    Monthly Cash in Hand<\/td>\n92,406<\/td>\n119,563<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n

    Reaching a salary level of \u20b915 lakh or more is commendable, but managing your finances wisely is what sets you apart. Taxes are inevitable, but they are also manageable. Whether it’s through structuring your salary, making the right investments, or choosing the appropriate tax regime, every bit of planning helps you keep more of what you earn.<\/span><\/p>\n

    Start early, plan monthly, and stay updated on tax laws. Tax planning isn\u2019t just about saving money\u2014it\u2019s about achieving peace of mind, building wealth, and securing your financial future.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

    Earning over \u20b915 lakh a year is a significant milestone. It reflects your hard work, dedication, and the trust your organisation places in you. However, this success brings with it an important responsibility – tax planning. If you don\u2019t plan wisely, a big chunk of your income could go towards taxes. The good news is […]<\/p>\n","protected":false},"featured_media":5915,"comment_status":"closed","ping_status":"closed","template":"","meta":{"_acf_changed":false,"_updated_date":""},"blog-category":[391],"acf":[],"yoast_head":"\nHow to save tax for salary above \u20b915 lakh\u00a0<\/title>\n<meta name=\"description\" content=\"Reaching a salary level of \u20b915 lakh? 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