Tax planning is an essential aspect of financial management, especially for individuals earning a salary above Rs. 1 crore. With higher income comes higher tax liabilities, making it crucial to explore strategies that can help you save on taxes while securing your financial future. One such reliable and efficient way to achieve this is through Bajaj Finance Fixed Deposits (FDs). In this article, we will explore tax-saving strategies under both the old and new tax regimes, explain surcharge rates, and illustrate tax calculations for high-income earners.
How to save tax for salary above 1 crore?
How to save tax for salary above 1 crore depends on your regime choice — in FY 2026-27, the new tax regime levies a 15% surcharge on income between ₹1–2 crore, making regime comparison essential before investing.
Looking for safe returns? Choose AAA-rated Bajaj Finance FD—trusted by over 5 lakh investors
Introduction
Key tax saving deductions under new tax regime
The new tax regime, introduced in the Union Budget 2020, offers lower tax rates but limits the number of deductions and exemptions available. While it provides a simplified tax structure, it is essential to understand the limited opportunities for tax savings:
- Standard Deduction: Rs. 50,000 for salaried individuals.
- Employer’s Contribution to NPS: Up to 10% of salary (basic + dearness allowance) is exempt from tax.
- Employer’s Contribution to EPF and Gratuity: Contributions up to Rs. 7.5 lakh annually are tax-free.
Although the new tax regime reduces the complexity of filing taxes, it limits the scope for claiming deductions. To secure your financial future, consider investing in Bajaj Finance Fixed Deposits, which offer guaranteed returns, high interest rates, and flexible tenures.
Pro Tip: Start investing in Bajaj Finance FD with just Rs. 15,000 and enjoy assured returns while planning your taxes efficiently.
Key tax saving deductions under old tax regime
The old tax regime allows taxpayers to claim various exemptions and deductions to reduce their taxable income. For individuals earning over Rs. 1 crore, optimising these deductions can significantly lower tax liabilities.
Part 1 - Exemptions
Under the old tax regime, several exemptions can reduce your taxable income:
- House Rent Allowance (HRA): If you live in rented accommodation, you can claim HRA exemptions based on your rent paid, basic salary, and the location of your residence.
- Leave Travel Allowance (LTA): Expenses incurred for travelling within India with your family can be claimed as tax-free, subject to certain conditions.
- Standard Deduction: Salaried individuals can claim a flat deduction of Rs. 50,000.
By wisely utilising these exemptions and parking your savings into secure instruments like Bajaj Finance Fixed Deposits, you can ensure financial growth while reducing reliance on higher-taxed income sources.
Part 2 - Deductions
The old tax regime also offers numerous deductions that can be leveraged to reduce tax liabilities. Below is a summary of key deductions:
| Section | Purpose/Benefit | Limit (in Rs.) |
|---|---|---|
| 80C | Investment in ELSS, PPF, or life insurance | Up to Rs. 1.5 lakh |
| 80D | Health insurance premium | Rs. 25,000 – Rs. 50,000 |
| 80E | Interest on education loan | No upper limit |
| 80G | Donations to specified funds or charities | 50% to 100% of the donation |
| 80CCD(1B) | Additional investment in NPS | Up to Rs. 50,000 |
Pro Tip: Combine these deductions with investments in Bajaj Finance FDs to maximise your savings and enjoy a stable financial future.
Surcharge under old and new tax regime
For individuals earning above Rs. 1 crore, a surcharge is applicable on the income tax payable. The rates differ based on the tax regime you choose. Below is a comparison:
| Income Range (Rs.) | Surcharge under Old Tax Regime | Surcharge under New Tax Regime |
|---|---|---|
| 50 lakh – 1 crore | 10% | 10% |
| 1 crore – 2 crore | 15% | 15% |
| 2 crore – 5 crore | 25% | 25% |
| Above 5 crore | 37% | 25% |
Regardless of the tax regime you choose, investing in a Bajaj Finance FD ensures that your hard-earned wealth grows steadily with high-interest rates and remains secure from market volatility.
Example of tax calculation under new and old tax regime for salary above Rs. 1 crore
To better understand the implications of both tax regimes, let us consider an example:
Scenario: An individual earns Rs. 1.2 crore annually.
Under Old Tax Regime:
- Total income: Rs. 1,20,00,000
- Standard deduction: Rs. 50,000
- Section 80C deduction: Rs. 1,50,000
- Section 80D deduction: Rs. 50,000
- Taxable income: Rs. 1,17,50,000
Tax calculation:
- Tax on Rs. 10,00,000 at 30%: Rs. 3,00,000
- Tax on Rs. 1,07,50,000 at 30%: Rs. 32,25,000
- Surcharge (15% of Rs. 32,25,000): Rs. 4,83,750
- Total tax: Rs. 40,58,750
Under New Tax Regime:
- Total income: Rs. 1,20,00,000
- Taxable income: Rs. 1,20,00,000 (no deductions allowed)
Tax calculation:
- Tax on Rs. 1,20,00,000 at 30%: Rs. 36,00,000
- Surcharge (15% of Rs. 36,00,000): Rs. 5,40,000
- Total tax: Rs. 41,40,000
The old tax regime offers more savings due to the availability of deductions. However, choosing the right regime depends on your financial profile.
Pro Tip: Use the Bajaj Finance FD Calculator to estimate your returns and plan your investments effectively.
Conclusion
Tax planning is crucial for individuals earning above Rs. 1 crore to maximise savings and reduce liabilities. By understanding the nuances of the old and new tax regimes, you can make informed decisions to optimise your taxes. Additionally, investing in Bajaj Finance Fixed Deposits offers a secure way to grow your wealth with high interest rates, flexible tenures, and guaranteed returns.
Take the first step towards financial security today. Open a Bajaj Finance Fixed Deposit online with just a few clicks and enjoy peace of mind knowing your savings are in safe hands.
Frequently Asked Questions
What is the Surcharge on Rs 1 crore income on the old and new tax regime?
The surcharge rate is 15% for income above Rs. 1 crore under both tax regimes.
Which ITR is to be filed if your salary is above Rs. 50,00,000?
Salaried individuals with income above Rs. 50,00,000 must file ITR-2 or ITR-3, depending on their income sources.
Which is the better regime (old or new) for salary above Rs. 1 Crores?
The old tax regime may be more beneficial for individuals who can claim exemptions and deductions. Evaluate both options to make an informed decision.
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