Income Tax On 90 Lakh Salary

Managing income tax on a salary of Rs. 90 lakh can feel overwhelming, but it’s a crucial step toward building financial stability and achieving long-term goals. With the introduction of the new tax regime in Budget 2025-26, things have changed—simplified tax slabs make calculations easier, but the removal of popular deductions and exemptions means you need to rethink your tax-saving strategies. Whether you are comparing the new regime with the old one or exploring actionable ways to save taxes, opting for life insurance plans can be a smart option, offering the dual benefits of financial protection and tax relief.

Let’s dive in and see how you can make informed choices to optimize your tax liabilities and secure your financial future.

What is the Budget 2025 update on the income tax?

The Union Budget 2025 introduced significant updates to the income tax structure, particularly under the new regime. Here are the key highlights:

• Simplified tax slabs: 

The new regime provides straightforward tax slabs with reduced rates but eliminates most exemptions and deductions.

• Focus on compliance: 

The government aims to reduce the compliance burden for taxpayers by offering a transparent and easy-to-understand structure.

• Standard deduction: 

A standard deduction of Rs. 50,000 is available even under the new regime, offering some relief to salaried individuals.

• Surcharge relief on high incomes: 

A key highlight — the maximum effective tax rate for ultra HNIs has been capped at 39%. Earlier it could go above 42%.

These updates make the new regime slightly more attractive for high-income earners — but only if you're not claiming deductions under 80C, 80D, or HRA.

Why it matters:

Choosing between old and new regimes isn’t just about slabs — it’s about how much you invest and save. If you use tax-saving tools like ULIPs or child plans, the old regime may still be more beneficial.

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While the new tax regime introduces simplified slabs, the old regime remains available as an option for taxpayers. Here are key components of the old regime that remain unchanged:

Standard deductions and exemptions

Under the old tax regime, individuals earning Rs. 90 lakh can benefit from deductions such as:

• Section 80C: Deduction up to Rs. 1.5 lakh for investments in life insurance premiums, Employee Provident Fund (EPF), Public Provident Fund (PPF), etc.
• HRA: Tax exemption on house rent allowance.
• Section 80D: Deduction for health insurance premiums.

Tax slabs under the old regime

The tax slabs under the old regime are as follows:

• Income up to Rs. 2.5 lakh: No tax
• Income from Rs. 2.5 lakh to Rs. 5 lakh: 5%
• Income from Rs. 5 lakh to Rs. 10 lakh: 20%
• Income above Rs. 10 lakh: 30%

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The Budget 2025 introduced several measures to simplify taxation for high-income earners, including those earning Rs. 90 lakh annually. Here are the most relevant updates:

• Simplified compliance: The new regime eliminates the need to track multiple deductions and exemptions, making it easier to calculate and file taxes.
• Flat tax structure: Taxpayers can benefit from a straightforward slab system under the new regime, reducing the complexity of tax planning.
• Reduced tax rates: The new regime offers lower tax rates compared to the old regime, but at the cost of deductions and exemptions.

These changes aim to encourage taxpayers to adopt the new regime, but it is essential to evaluate your financial situation before making a decision.

Why this matters for you:

High-income earners now have a clear decision point — either adopt the lower-tax, no-deduction regime, or maximise benefits under the old regime using smart financial products.

Pro tip:

If you're investing for long-term wealth creation and tax savings, products like ULIPs, retirement plans, and child education policies offer triple benefits — protection, returns, and tax exemption.

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How to save tax for salary above Rs. 90 lakh?

Saving taxes on a Rs. 90 lakh salary requires strategic planning. Here are some actionable tips to reduce your tax liability:

1. Choose the right tax regime:

• Old regime: Opt for this if you have significant investments or eligible allowances. For example, deductions under Section 80C can reduce taxable income by up to Rs. 1.5 lakh.
• New regime: Choose this for a simpler tax calculation process, especially if you do not have substantial deductions.

2. Invest in ULIPs

Unit Linked Insurance Plans (ULIPs) are a powerful tool for high-income earners. They provide:

• Tax savings: Premiums paid for ULIPs are eligible for deductions under Section 80C.
• Wealth creation: ULIPs offer market-linked returns, helping you build a corpus for future goals.
• Tax-exempted maturity: The maturity proceeds are exempt from tax under Section 10(10D), subject to conditions.

3. Leverage allowances

If you are eligible for allowances such as HRA, LTA, or education allowance, ensure you claim them to reduce your taxable income.

4. Maximise Section 80D benefits

Health insurance premiums for yourself and your family can be claimed as deductions under Section 80D, providing additional tax relief.

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Here’s a quick comparison of the current slab structures to help you decide which regime works better for your income and goals:

Old tax regime (with deductions):

New tax regime (no deductions):

Under the old regime, deductions and exemptions can significantly reduce taxable income. In contrast, the new regime offers lower rates but eliminates most exemptions.

How to save tax on Rs. 90 lakh salary

Here are additional strategies to save taxes for high-income earners:

• Opt for riders in life insurance policies:

Enhance your life insurance coverage with riders like critical illness or accidental death benefits, which may qualify for additional tax relief.

• Invest in ULIPs

ULIPs offer the dual advantage of market-linked returns and tax benefits. The premium paid is deductible under Section 80C, and the maturity proceeds are tax-free under Section 10(10D).

• Flexible premium options

For individuals earning Rs. 90 lakh, premium options like Rs. 1 crore term insurance plans starting at Rs. 15 per day can be a cost-effective way to secure financial protection and reduce tax liabilities.

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Conclusion

Tax planning is essential for individuals earning Rs. 90 lakh annually, especially under the new tax regime introduced in Budget 2025-26. By understanding the tax provisions and making informed financial decisions can help optimize tax liability. Investments such as life insurance investments,  along with other eligible instruments, can not only provide financial protection but may also offer tax benefits, subject to conditions under the Income-tax Act, 1961.

Take the first step toward smarter tax planning today.