Managing taxes effectively is crucial for individuals earning a salary exceeding 10 lakhs. With many options available and tax regulations constantly evolving, understanding how to save taxes becomes imperative. Individuals can minimise their tax burdens by exploring legitimate avenues for tax optimisation while making informed financial decisions. In this blog, we will discuss the strategies for tax savings for salaries exceeding 10 lakhs.
Steps to Save Tax for Salary above 10 Lakhs
When aiming to how to save tax for salary above 10 lakhs, employing strategic methods is key. Here are some essential steps:
- Choosing the Right Tax Regime: Selecting the appropriate tax regime entails aligning with your financial situation and goals. This involves comparing the old and new tax regimes, each with unique advantages. The old regime offers deductions and exemptions, while the new regime boasts lower tax rates but fewer deductions. Assessing income sources, potential deductions and long-term financial objectives guides informed decision-making. Opting for a regime that balances tax efficiency and financial goals ensures maximal savings and overall financial stability.
- Maximising Section 80(C) Deductions: Take advantage of Section 80(C) deductions by investing in instruments like PPF, ELSS and NSC to reduce taxable income.
- Taking Advantage of the HRA Exemption: If you’re a salaried individual paying rent, claim the House Rent Allowance (HRA) exemption to lower your taxable income.
- Claiming 80(D) Deductions on Health Insurance Premiums: Ensure adequate health insurance coverage for yourself and your family and claim deductions under Section 80(D) for the premiums paid.
- Utilising Tax Deductions on Loans: If you have taken loans for education or housing, you can take deductions available under relevant sections like 80(E) for education loan interest and 24(b) for home loan interest, effectively reducing your taxable income.