Every Indian citizen in the tax bracket is liable to pay taxes on the earnings in a financial year. The same goes for salaried employees who receive a specific amount every month. As a salaried employee, you must pay taxes on the salary you earn every year. However, paying taxes reduces the overall savings, negatively affecting your long-term financial plan. Hence, it is important that you know how you can save taxes to ensure increased savings.
This blog will help you understand how to save tax for a salary above Rs. 9 lakh to avoid paying additional taxes.
Budget 2024: New income tax slabs offer significant savings for incomes of Rs. 9 lakh or more
The Union Budget 2024, released on July 23, 2024, introduced several changes to the income tax slabs under the new tax regime. These changes are designed to provide more benefits to people with taxable incomes up to Rs. 10 lakh. However, note that there is no change in the basic exemption limit for the old and new tax regimes.
Under the new tax regime, you don't have to pay any tax if your taxable income is up to Rs. 7 lakh. The new tax slabs for different income ranges are as follows:
- Income up to Rs. 3,00,000: No tax
- Income from Rs. 3,00,001 to Rs. 7,00,000: 5% tax
- Income from Rs. 7,00,001 to Rs. 10,00,000: 10% tax
- Income from Rs. 10,00,001 to Rs. 12,00,000: 15% tax
- Income from Rs. 12,00,001 to Rs. 15,00,000: 20% tax
- Income above Rs. 15,00,001: 30% tax
These new slabs are intended to provide tax relief primarily to the lower-middle class.
Proposed income tax slabs for the new tax regime
Current Tax Slabs |
Current Tax Rates |
Proposed Tax Slabs |
Proposed Tax Rates |
Change |
Up to Rs. 3,00,000 |
NIL |
Upto Rs. 3,00,000 |
NIL |
No Change |
Rs. 3,00,000- Rs. 6,00,000 |
5% |
Rs. 3,00,000- Rs. 7,00,000 |
5% |
Slab expanded by Rs. 1,00,000 |
Rs. 6,00,000- Rs. 9,00,000 |
10% |
Rs. 7,00,000- Rs. 10,00,000 |
10% |
Slab expanded by Rs. 1,00,000 |
Rs. 9,00,000- Rs. 12,00,000 |
15% |
Rs. 10,00,000- Rs. 12,00,000 |
15% |
Continuity |
Rs. 12,00,000- Rs. 15,00,000 |
20% |
Rs. 12,00,000- Rs. 15,00,000 |
20% |
No Change |
Above Rs. 15,00,000 |
30% |
Above Rs. 15,00,000 |
30% |
No Change |
Tax slabs under old vs. new tax regime - FY 2023-24 and FY 2024-25
Tax Slab for FY 2023-24 |
Tax Rate |
Tax Slab for FY 2024-25 |
Tax Rate |
Upto Rs. 3 lakh |
Nil |
Upto Rs. 3 lakh |
Nil |
Rs. 3 lakh - Rs. 6 lakh |
5% |
Rs. 3 lakh - Rs. 7 lakh |
5% |
Rs. 6 lakh - Rs. 9 lakh |
10% |
Rs. 7 lakh - Rs. 10 lakh |
10% |
Rs. 9 lakh - Rs. 12 lakh |
15% |
Rs. 10 lakh - Rs. 12 lakh |
15% |
Rs. 12 lakh - Rs. 15 lakh |
20% |
Rs. 12 lakh - Rs. 15 lakh |
20% |
More than 15 lakh |
30% |
More than 15 lakh |
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 |
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. |
Section 80G - donating to charity |
50% of 100% of the donated amount for notified institutions. |
Section 80C investing in tax saving instruments |
Tax benefits up to Rs. 1.5 lakh. Some investing options include:
|
Section 80DD- costs to treat disabled dependents |
If you bear the medical cost for disabled dependants, you are eligible for tax relief:
|
Home loan payments |
Principal amount: Up to Rs. 1.5 lakh u/s 80C Interest amount: Up to Rs. 2 lakh paid under section 24b |
The maturity amount of a Life Insurance Policy |
You can take a tax benefit on the maturity proceeds if the sum assured is less than:
|
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.
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.
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)
Which regime is better for 9 lakh LPA to save tax?
Here is a detailed table for you to understand which regime is better for Rs. 9 lakh LPA:
| Particulars | Old tax regime (in Rs.) | New tax regime (In Rs.) |
| Gross salary | 9,00,000 | 9,00,000 |
| Less: Standard deduction | 50,000 | 75,000 |
| Net salary after standard deduction | 8,50,000 | 8,25,000 |
| Deductions: | ||
| Section 80C | 1,50,000 | Not applicable |
| Section 80D | 25,000 | Not applicable |
| Section 24(b) | 2,00,000 | Not applicable |
| Section 80CCD(1B) | 50,000 | Not applicable |
| Total deductions | 4,00,000 | 0 |
| Net taxable income | 4,25,000 | 8,25,000 |
As you can see, with the full utilisation of various deductions in the old regime, you can effectively bring down your total tax liability to zero. On the other hand, you will end up paying Rs. 33,800 as tax in the new regime after considering the proposed changes in the Union Budget 2024.
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.
It is worth mentioning that if you choose the new regime, you will be required to pay Rs. 32,500 as income tax on Rs. 9 lakh salary after considering all the proposed changes stipulated in the Union Budget 2024.
Also read: Income tax return extended date 2024
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.
