Proposed income tax slabs for the new tax regime
Current Tax Slabs
|
Current Tax Rates
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Proposed Tax Slabs
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Proposed Tax Rates
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Change
|
Up to Rs. 3,00,000
|
NIL
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Upto Rs. 3,00,000
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NIL
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No Change
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Rs. 3,00,000- Rs. 6,00,000
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5%
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Rs. 3,00,000- Rs. 7,00,000
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5%
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Slab expanded by Rs. 1,00,000
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Rs. 6,00,000- Rs. 9,00,000
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10%
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Rs. 7,00,000- Rs. 10,00,000
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10%
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Slab expanded by Rs. 1,00,000
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Rs. 9,00,000- Rs. 12,00,000
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15%
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Rs. 10,00,000- Rs. 12,00,000
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15%
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Continuity
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Rs. 12,00,000- Rs. 15,00,000
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20%
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Rs. 12,00,000- Rs. 15,00,000
|
20%
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No Change
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Above Rs. 15,00,000
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30%
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Above Rs. 15,00,000
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30%
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No Change
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Tax slabs under old vs. new tax regime - FY 2023-24 and FY 2024-25
Tax Slab for FY 2023-24
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Tax Rate
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Tax Slab for FY 2024-25
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Tax Rate
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Upto Rs. 3 lakh
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Nil
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Upto Rs. 3 lakh
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Nil
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Rs. 3 lakh - Rs. 6 lakh
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5%
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Rs. 3 lakh - Rs. 7 lakh
|
5%
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Rs. 6 lakh - Rs. 9 lakh
|
10%
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Rs. 7 lakh - Rs. 10 lakh
|
10%
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Rs. 9 lakh - Rs. 12 lakh
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15%
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Rs. 10 lakh - Rs. 12 lakh
|
15%
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Rs. 12 lakh - Rs. 15 lakh
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20%
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Rs. 12 lakh - Rs. 15 lakh
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20%
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More than 15 lakh
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30%
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More than 15 lakh
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30%
|
Also read: Hindu Undivided Family in the Income Tax Act 1961
Tax saving above 9 lakh salary under the new regime
The new regime does not offer a host of deductions and was created for individuals who do not want to invest in numerous investment instruments for tax benefits. However, there are still some deductions you can use to save tax on a Rs. 9 lakh salary:
| Standard deduction |
Basic deduction for salaried individuals |
| Section 80CCD(2) |
Employer contribution to NPS |
| Section 80CCH |
Investments made in Agniveer corpus |
| Section 57(iia) |
Family pension received |
| Section 10(10C) |
Voluntary retirement |
| Section 10(10) |
Gratuity |
| Section 10(10AA) |
Leave encashment |
| Section 24 |
Interest on a home loan on the let-out property |
Furthermore, some other deductions under the new regime are as follows:
- Transport allowance in case you are a specially-abled person.
- Conveyance allowance to cover the expenses incurred for travelling as part of the employment.
Also read: What is the meaning of inheritance tax
Tax saving above 9 lakh salary under the old regime tax
The old tax regime contains numerous deductions and exemptions you can use to lower your tax liability significantly on a Rs. 9 lakh salary. Here are the deductions you can utilise:
Section 80D - health insurance premium
|
Rs. 25,000 for self, spouse, and dependent children
Rs. 50,000 if above 60 years of age
Parents: Rs. 25,000 and Rs. 50,000 if above 60 years of age.
|
Section 80 E-education loan
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Deduction for 8 years from the year of repayment of education loan taken for self, spouse, dependent children, or for a student for whom the individual is a legal guardian.
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Section 80G - donating to charity
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50% of 100% of the donated amount for notified institutions.
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Section 80C investing in tax saving instruments
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Tax benefits up to Rs. 1.5 lakh. Some investing options include:
- Public Provident Fund (PPF)
- Employees’ Provident Fund (EPF)
- Equity Linked Saving Scheme funds (ELSS)
- Home loan repayment and Stamp duty
- Sukanya Smriddhi Yojana (SSY)
- National Savings Certificate (NSC)
- Fixed Deposit for 5 years and more
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Section 80DD- costs to treat disabled dependents
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If you bear the medical cost for disabled dependants, you are eligible for tax relief:
- 40% disability: Rs. 75,000
- 80% or severe disability: Rs. 1.25 lakh
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Home loan payments
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Principal amount: Up to Rs. 1.5 lakh u/s 80C
Interest amount: Up to Rs. 2 lakh paid under section 24b
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The maturity amount of a Life Insurance Policy
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You can take a tax benefit on the maturity proceeds if the sum assured is less than:
- 20% for policies issued before 1 April 2012
- 10% for policies issued after 1 April 2012
- 15% for policies issued after 1 April 2013 for a person with a disability.
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How to save tax for salary above 9 lakh?
Here is how to save tax for salary above Rs. 9 lakh:
1. Choose the right regime
As there are two tax regimes, it is important that you choose between the two. Analyse both tax regimes and decide between the old tax regime (with deductions and exemptions) and the new tax regime (with lower tax rates but no deductions). Evaluate which regime offers the lowest tax liability based on your eligible deductions and exemptions. You can use online tax calculators to compare the tax liability of both tax regimes and choose the most suitable one.
2. Claim standard deduction
When filing taxes, ensure that you utilise the standard deduction of Rs. 50,000. The standard deduction is available in both tax regimes, so you do not have to compare the two based on this deduction. Utilising the standard deduction will effectively lower your taxable income by Rs. 50,000 under the old regime and by Rs. 75,000 under the new regime (up from the previous limit of Rs. 50,000 in Union Budget 2024).
3. Claim deduction for interest paid against home loan
If you have a home loan, you can claim a deduction for the interest you pay on it while filing taxes. Under section 80C, you can claim a deduction on the principal amount up to Rs. 1.5 lakh, while you can claim a deduction on the interest amount up to Rs. 2 lakh under section 24b.
Section 24 offers tax benefits on interest paid on home loans. The deduction depends on the property's usage:
- Rented property: You can claim the entire interest paid on the housing loan as a deduction.
- Self-occupied or vacant house: You’re eligible for a deduction of up to Rs. 2 lakh annually on interest.
Eligibility criteria for claiming Section 24 deduction:
- The home loan must be sanctioned on or after April 1, 1999.
- The borrowed funds should be used exclusively for purchasing or constructing a residential property.
- The construction or purchase must be completed within five years from the end of the financial year in which the loan was taken.
- You must obtain an interest certificate from the lender as proof.
Impact on taxable income:
Assume a gross taxable income of Rs. 8,50,000 under the old tax regime. By claiming a deduction of Rs. 2,00,000 on interest paid under Section 24:
- Taxable income = Rs. 8,50,000 – Rs. 2,00,000
- Revised taxable income = Rs. 6,50,000
4. Claim deduction under section 80C of the Income Tax Act
Section 80C provides numerous deductions, and you can fully utilise them to lower your taxable income by Rs. 1.5 lakh. Some investments under section 80C are:
- Public Provident Fund (PPF
- Employee Provident Fund (EPF)
- Equity Linked Savings Scheme (ELSS)
- National Savings Certificate (NSC)
- Life Insurance Premiums
- Principal repayment of home loan
- Tuition fees for children
5. Claim rebate under section 87A
Rebate under Section 87A is available in both tax regimes. In the old regime, if your taxable income is up to Rs. 5 lakh, you can claim a maximum rebate of Rs. 12,500. In the new regime, for FY 2023-24 (AY 2024-25), if your taxable income is up to Rs. 7 lakh, you can claim a maximum rebate of Rs. 25,000.
6. Avail tax benefits on health insurance premiums
Under Section 80D of the Income Tax Act, you can claim deductions on premiums paid for health insurance policies:
- For self, spouse, and dependent children: Deduction up to Rs. 25,000
- For parents:
- Rs. 25,000 if they are below 60 years
- Rs. 50,000 if they are senior citizens
These benefits are applicable only if the insurance policy is from a recognised insurer and the premium is paid in non-cash mode.
Also, the deduction can be claimed only after you’ve filed your income tax return.
Example Calculation:
If your taxable income at Step 4 was Rs. 5,00,000, and you paid Rs. 50,000 as health insurance premium (including parents):
- Revised Taxable Income = Rs. 5,00,000 – Rs. 50,000
- = Rs. 4,50,000
This helps reduce your tax burden effectively, especially when combined with other eligible deductions.
Additional deductions under the old regime:
You can maximise your tax savings by utilising additional deductions under the old regime, such as:
- Section 80D: Health insurance premiums (Rs. 25,000 for self, spouse, and children; an additional Rs. 25,000 for parents below 60 years, Rs. 50,000 if they are above 60).
- Section 80E: Interest on education loan.
- Section 80G: Donations to specified charitable institutions.
- Section 80CCD(1B): Additional contribution to NPS (Rs. 50,000)
Also read: What is Direct Tax Code 2025
How to pay no income tax on Rs. 9 lakh salary?
If you do not want to pay income tax on your income, you can choose the old income tax regime. Furthermore, you need to utilise various deductions and exemptions available under the old tax regime.
Start by claiming the standard deduction of Rs. 50,000, which reduces your taxable income to Rs. 8.5 lakh. Next, maximise your deductions under section 80C by investing up to Rs. 1.5 lakh in instruments such as PPF, ELSS, or paying for life insurance premiums and children's tuition fees. This brings your taxable income down to Rs. 7 lakh. If you have a home loan, claim the interest deduction under section 24(b) up to Rs. 2 lakh, further reducing your taxable income to Rs. 5 lakh.
Additionally, health insurance premiums can be claimed under section 80D, which allows a deduction of Rs. 25,000 for self, spouse, and children. Contribute to the National Pension System (NPS) under section 80CCD(1B) for an additional deduction of Rs. 50,000. These steps can reduce your taxable income below Rs. 5 lakh, making you eligible for the section 87A rebate and eliminating any tax liability.
Summary
If you are earning Rs. 9 lakh, there are numerous ways you can save tax and even bring your tax liability to zero. However, it is important that you do effective tax planning and ensure that you choose an ideal tax regime and make use of all the deductions and exemptions available. Now that you know how to save tax for salary above Rs. 9 lakh, you can increase your savings and invest them to build wealth.
One way to invest the money you save by lowering your tax liability is mutual fund schemes. You can visit the Bajaj Finserv Mutual Fund Platform for investing in mutual funds. You can compare mutual fund schemes through unique tools such as mutual fund calculators.
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