How to Save Income Tax on Rs. 15 Lakh Salary

Earning a salary of Rs. 15 lakh or more puts you in a higher tax bracket, which means your tax liability can be significant. If you’ve been wondering how much tax applies to such an income, note that any earnings above Rs. 15 lakh attract a 30% tax rate under the new tax regime.

Fortunately, the Income Tax Act allows various deductions and exemptions that can help lower your total tax outgo. With proper planning, you can reduce your taxable income considerably. In this blog, we’ll explore both tax regimes, outline slab rates, and discuss practical ways to reduce your tax burden.

New tax regime slabs per

As per the current income tax structure in India, individuals fall under different tax slabs based on their annual income. For the financial year 2025-26, the slabs for individuals below 60 years are as follows:

For a salary of Rs. 15 lakh, an individual would fall into the 15% tax slab. Let us explore strategies to optimise tax planning within this bracket.

Slab rates applicable for FY 2024-2025 (AY 2025-26)

Per the Finance Act 2024, the slab rates for the new tax regime (the default regime) for FY 2024-25 are listed below. These apply to individuals below 60 years of age:

Standard deduction under this regime is now Rs. 75,000 and family pension deduction is increased to Rs. 25,000.

Strategies for tax planning on a Rs. 15 lakh salary

1. Deductions under Section 80C

Under the old tax regime, you can claim a deduction of up to Rs. 1.5 lakh under Section 80C. You can invest in a variety of financial instruments such as:

• Employees’ Provident Fund (EPF)

• Public Provident Fund (PPF)

• National Savings Certificate (NSC)

• Equity Linked Saving Scheme (ELSS)

• Life Insurance Premiums

• 5-Year Fixed Deposits

• Sukanya Samriddhi Yojana (SSY)

• Repayment of home loan principal

• Tuition fees for children

These options not only save tax but also help in long-term financial planning.

2. Home loan tax benefits

A home loan offers tax benefits on both principal repayment and interest paid:

• Principal repayment: Up to Rs. 1.5 lakh under Section 80C.

• Interest payment: Up to Rs. 2 lakh deduction under Section 24(b).

• Additional benefits: First-time homebuyers can claim further deductions under Section 80EE or 80EEA if eligible.

Note: These are applicable only under the old regime.

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3. National Pension Scheme (NPS)

Investing in the NPS can offer extra tax relief:

• An additional deduction of Rs. 50,000 under Section 80CCD(1B) on top of Section 80C (old regime).

• Employer’s Contribution under Section 80CCD(2) is allowed in both regimes:

  • Government employees: Up to 14% of basic + DA

  • Other employees: Up to 10% (old regime) or 14% (new regime)

4. Medical insurance premium (Section 80D)

Health insurance premiums are deductible under Section 80D (old regime):

These benefits not only provide tax relief but also safeguard against medical expenses.

5. Standard Deduction and Professional Tax

• Standard deduction:

  • Rs. 50,000 under old regime

  • Rs. 75,000 under new regime (from FY 2024–25 onwards)

• Professional tax:

  • Deductible from salary income in states where applicable (usually Rs. 2,400 per year).

  • Allowed only under the old regime.

6. House rent and travel allowances

Under the old tax regime, salaried employees can claim:

• House Rent Allowance (HRA): Exemption based on rent paid, city of residence, and basic salary.

• Leave Travel Allowance (LTA): Exemption on domestic travel expenses (actual fares) for two journeys in a block of four years.

You’ll need to provide relevant proofs and bills for claiming these exemptions.

7. Exempt allowances

Certain allowances paid by your employer are tax-free within limits under the old tax regime. Examples include:

These can be structured as part of your salary to optimise tax savings.

8. Tax-saving fixed deposits

You can invest in 5-year fixed deposits with banks to claim a deduction under Section 80C (old regime). These FDs are eligible for up to Rs. 1.5 lakh deduction, but note that the interest earned is taxable.

9. Investment diversification

Diversifying your tax-saving investments across different instruments can help reduce risk and maximise returns. Here’s a sample mix under Section 80C:

You don’t need to invest in all, but aim to make full use of the Rs. 1.5 lakh limit.

10. Gifts and inheritances

Some forms of income are completely exempt from tax:

• Gifts received from specified relatives (parents, siblings, spouse, etc.) are tax-free, regardless of the amount.

• Gifts from non-relatives are tax-free only up to Rs. 50,000 in a financial year.

• Inheritances (e.g. property or money left by a deceased family member) are not taxable. However, income earned from inherited assets is taxable.

Planning around such income sources can help manage your overall tax liability.

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Tax slabs under old vs. new regime

Choosing the right tax regime is essential, especially if your income is Rs. 15 lakh or more. The old regime offers a range of deductions and exemptions which can significantly reduce your taxable income. In contrast, the new regime comes with lower slab rates but minimal deductions.

Here's a side-by-side comparison of both regimes for FY 2024-25:

Note: Old regime exemptions differ based on age. Individuals aged 60–80 have a basic exemption of Rs. 3 lakh and above 80 years, Rs. 5 lakh.

Deductions and exemptions under new tax regime

India's new tax regime, introduced in the Union Budget 2020, offers lower tax rates but eliminates some deductions and exemptions. This article explores key features, deductions, and exemptions under the new tax structure and provides insights for optimising financial planning.

Key features of the new tax regime

Some of its highlights include:

• Flat tax slabs for all individuals, including senior and super senior citizens.

• A rebate of up to Rs. 25,000 under Section 87A for incomes up to Rs. 7 lakh.

• Standard deduction raised to Rs. 75,000 for salaried individuals.

• Deduction on family pension increased to Rs. 25,000.

• Employer’s contribution to NPS is deductible up to 14% of salary + DA.

• Maximum surcharge has been reduced to 25%.

Despite fewer deductions, the lower tax rates and simpler compliance process make this a suitable option for many taxpayers.

Deductions and exemptions under the new tax regime

• A standard deduction of up to Rs. 75,000 is available for salaried individuals.

• Contributions made by your employer to the National Pension Scheme (NPS) under Section 80CCD(2) qualify for a deduction.

• Investments made into the Agniveer Corpus Fund under Section 80CCH are also eligible.

• Pension received by family members can be deducted under Section 57(iia).

• You can claim tax relief on gratuity, leave encashment, and voluntary retirement payouts under sections 10(10), 10(10AA), and 10(10C).

• Interest paid on home loans for rented properties can be deducted under Section 24.

• Special tax allowances are given for transport if the person is specially-abled.

• Conveyance allowances and travel reimbursements related to your job are also tax-free.

Optimising financial planning under the new tax regime

1. Evaluate deduction impact: Assess the impact of foregone deductions on overall tax liability.
2. Consider individual circumstances: Evaluate personal circumstances to determine the most beneficial tax regime.
3. Tax planning through investments: Explore alternative tax-saving investments such as NPS and Atal Pension Yojana.
4. Consult with financial advisers: Seek advice from professionals to understand the implications and make informed decisions.

Deductions and exemptions under old tax regime

If your annual income is Rs. 15 lakh and you opt for the old tax regime, you can take advantage of multiple tax-saving options through exemptions and deductions.

1. Salary-based exemptions

Your salary may include several tax-free components, depending on your company’s structure:

2. Deductions you can claim

You can also reduce your tax by claiming deductions on the following:

To make full use of the Rs. 1.5 lakh limit under Section 80C, consider investing in ELSS (Rs. 60,000), term insurance (Rs. 12,000), ULIPs or endowment plans (Rs. 12,000), paying school fees (Rs. 25,000 to Rs. 1 lakh), and contributing to EPF (Rs. 30,000 to Rs. 72,000).

Property investment through home loans remains one of the most effective ways to maximise your Section 80C benefits whilst building long-term wealth. With Bajaj Finserv, you can claim deductions on both principal repayment and interest payments, potentially saving lakhs in taxes annually. Check your eligibility for competitive home loan rates starting from 7.49%* p.a.. You may already be eligible, find out by entering your mobile number and OTP.

The new tax regime offers lower rates but eliminates certain deductions. Taxpayers should carefully assess their financial goals, consider alternative tax-saving avenues, and seek professional advice for informed decision-making.

How to save taxes for an income of Rs. 15 lakh?

If you earn Rs. 15 lakh annually, you can still lower your tax liability by making the most of available deductions and exemptions under both the old and new tax regimes. While the new tax regime offers fewer deductions, it provides a lower tax rate. The old regime allows a wide range of tax-saving options through exemptions and deductions under various sections.

1. Employer’s contribution to NPS – Section 80CCD(2)

Whether you follow the old or new regime, your employer’s contribution to the National Pension Scheme (NPS) qualifies for tax relief. However, the limit of this deduction depends on the type of employer and tax regime.

2. Gift taxation – Section 56

Any gift received, whether in cash or kind, is tax-free up to Rs. 50,000 in a financial year. However, if the total value exceeds this amount, the entire sum becomes taxable. This applies under both tax regimes.

3. Interest on loan for let-out property – Section 24

If you own a property that is rented out, you can claim the interest paid on the loan taken to purchase or build the property. There is no cap on this deduction, and it is available under both the new and old tax regimes.

4. Gratuity and leave encashment

When you retire or leave a job, payments received as gratuity or encashed leave are exempt up to a limit under Section 10. These exemptions apply under both tax systems, subject to specific thresholds set by law.

5. Additional employee cost – Section 80JJAA

If you run a business and hire more employees, you can claim a deduction of 30% on the additional employee cost for three years. This benefit applies whether you follow the new or old regime.

6. Agniveer Corpus Fund – Section 80CCH(2)

Those enrolled under the Agnipath scheme in the armed forces can claim a full deduction on the contribution made by the Central Government to the Agniveer Corpus Fund. There is no limit on this deduction, and it is available under both tax regimes.

Calculating Tax Under Old and New Tax Regimes

If you earn a salary of Rs. 15 lakh annually, it's important to understand how your taxes may vary depending on whether you choose the old tax regime or the new one. To illustrate this better, let’s take the case of Ms Maya, who has a yearly salary of Rs. 15 lakh. She receives various allowances and also invests in tax-saving instruments.

Under the old tax regime, she is eligible to claim several exemptions and deductions, including:

• HRA exemption: Rs. 1,00,000

• Leave Travel Allowance (LTA): Rs. 20,000

• Children’s education and hostel allowance: Rs. 9,600

• Standard deduction: Rs. 50,000

• Professional tax: Rs. 2,400

• Section 80C investment (e.g., PPF): Rs. 1,50,000

• Voluntary NPS contribution under Section 80CCD(1B): Rs. 50,000

• Medical insurance premium under Section 80D: Rs. 25,000

On the other hand, under the new tax regime, she cannot claim these exemptions, but the tax slabs offer reduced rates. Let’s compare both regimes for FY 2025-26 using a simplified table:

A breakdown of how the tax is calculated under each regime is given below:

Tax Breakdown: FY 2025–26

Old regime

• Up to Rs. 2.5 lakh: Nil

• Rs. 2.5 – 5 lakh: Rs. 12,500

• Rs. 5 – 10 lakh: Rs. 1,00,000

• Rs. 10 – 10.93 lakh: Rs. 27,900

• Cess (4%): Rs. 5,616

• Total: Rs. 1,46,016

New regime

• Rs. 4 – 8 lakh at 5%: Rs. 20,000

• Rs. 8 – 12 lakh at 10%: Rs. 40,000

• Rs. 12 – 14.25 lakh at 15%: Rs. 33,750

• Cess (4%): Rs. 3,750

• Total: Rs. 97,500

For FY 2024–25

As seen, in FY 2025–26, the new tax regime results in lower tax payable by Rs. 48,516. However, in FY 2024–25, the old regime offered more tax savings. This highlights the importance of choosing your tax regime based on your eligible deductions and annual investments.

Whether you choose the old or new tax regime, strategic financial decisions like home ownership can significantly impact your tax liability and wealth creation. A home loan from Bajaj Finserv not only helps you secure your dream property but also provides substantial tax benefits under both regimes. Check your home loan eligibility with Bajaj Finserv to explore rates starting from 7.49%* p.a. You may already be eligible, find out by entering your mobile number and OTP.