If you earn an annual salary of ₹15 lakhs and want to minimize your income tax liability, this article is essential for you. Many individuals with salaries of ₹15 lakhs or more ponder how to effectively save on taxes. By strategically utilizing income tax deductions and exemptions, you can significantly reduce your tax burden. Let’s explore the various avenues available for tax savings under the old tax regime for those earning between ₹12 to ₹15 lakhs.
Understanding Your Tax Savings Needs
For an annual salary of ₹15 lakhs under the old tax regime, a tax deduction of around ₹4.08 lakhs is essential. This means you will be liable to pay approximately ₹1.4 lakhs in tax. However, with careful planning, you can lower this amount even further. Here’s how to maximize your tax savings.
Strategies for Maximizing Tax Savings
The old tax structure offers several options you can leverage for enhanced tax savings. Below are specific deductions that can help you reduce your taxable income:
Key Deductions to Explore
- Standard Deduction: ₹50,000 under Section 16
- Professional Tax Exemption: ₹2,500
- House Rent Allowance (HRA): Up to ₹3.60 lakhs under Section 10 (13A)
- Leave Travel Allowance (LTA): ₹10,000 under Section 10 (5)
- Summing up these deductions, your taxable salary will become ₹7,71,500.
- Investments under Section 80C: Eligibility for a deduction of ₹1.50 lakhs (Includes LIC, EPF, PPF, children’s tuition fees, etc.)
- NPS Contribution: Additional ₹50,000 under Section 80CCD (National Pension Scheme Tier-1)
- Health Insurance Premiums: ₹25,000 for self, spouse, and children under Section 80D
- Senior Citizen Parents’ Health Policy: Additional ₹50,000 deduction
Resulting Taxable Income and Rebate
After utilizing the above deductions, your taxable income can drop to under ₹5 lakhs. When your taxable salary is below ₹5 lakhs, you become eligible for a rebate under Section 87A, as well as basic exemption benefits, potentially bringing your total tax liability down to zero.
Conclusion
By employing these strategic deductions under the old tax regime, high earners, particularly those making ₹15 lakhs or more, can not only reduce their taxable income but may also eliminate their tax liabilities altogether. Properly planning your financial investments and understanding your entitlements can lead to substantial savings. Always consider consulting a tax professional for personalized advice tailored to your financial situation.